Modvat credit on grinding wheels upheld despite defective declaration, as the error was procedural and revenue neutral.

Modvat credit on grinding wheels was treated as admissible despite the declaration having been filed under Rule 57G instead of Rule 57T, because the mistake was procedural and made under a bona fide understanding of the prevailing position. The grinding wheels were accepted as eligible capital goods, and the dispute concerned only the form of the declaration. As the credit would have been reflected in the corresponding Rule 57T account and no revenue loss arose, the credit could not be denied on this technical defect.

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Issues: Whether Modvat credit on grinding wheels was admissible under Rule 57A despite the declaration being filed under Rule 57G instead of Rule 57T, and whether the credit could be denied when the exercise was revenue neutral.

Analysis: The grinding wheels were admitted to be eligible as capital goods under the relevant notification, and the dispute turned on the form in which the declaration was made. The incorrect use of Rule 57G in place of Rule 57T was treated as a procedural mistake made under a bona fide understanding of the prevailing legal position. Since the credit, if expunged from one account, would have to be reflected in the corresponding account under Rule 57T, no revenue loss arose from the manner in which the credit was taken.

Conclusion: The credit could not be denied on the ground of the procedural defect, and the Revenue's appeal failed.

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