Modvat credit and rectification of record-based omission: relief allowed where duty-paid input eligibility was shown, but unsupported claim failed.

An omission in a final order to grant Modvat credit on duty-paid inputs was treated as an error apparent on the face of the record and was rectifiable under section 35C(2) because the claim had been raised at hearing and was supported by the record. The Tribunal reiterated that credit may be allowed on eligible duty-paid inputs used in manufacture, even where the procedural declaration requirement was not followed, subject to proof of duty payment and eligibility before the jurisdictional Assistant Commissioner. A separate claim for relief based on higher duty paid was rejected because the supporting letter was not on record, so no record-based mistake was shown.

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Issues: (i) Whether the omission in the final order to direct allowance of Modvat credit on duty-paid inputs used in manufacture of the exempted product constituted an error apparent on the face of the record warranting rectification under section 35C(2). (ii) Whether the request for relief in respect of duty paid at a higher rate could be rectified when the supporting letter was not on record.

Issue (i): Whether the omission in the final order to direct allowance of Modvat credit on duty-paid inputs used in manufacture of the exempted product constituted an error apparent on the face of the record warranting rectification under section 35C(2).

Analysis: The request for Modvat credit had been raised during hearing, but no direction was incorporated in the final order. The Tribunal treated this omission as an apparent mistake. It also reiterated the settled view that where a product initially considered exempt is held liable to central excise duty, credit on eligible duty-paid inputs is available even if the procedural declaration requirement was not followed, subject to proof that the inputs were duty paid and eligible.

Conclusion: The omission was rectifiable, and the applicants were held eligible for Modvat credit subject to production of documentary evidence before the jurisdictional Assistant Commissioner.

Issue (ii): Whether the request for relief in respect of duty paid at a higher rate could be rectified when the supporting letter was not on record.

Analysis: The claim for this further relief depended on a letter that had not been brought on record. In the absence of material on record, no mistake apparent from the record was made out for rectification.

Conclusion: No rectification was granted on this claim.

Final Conclusion: The applications succeeded only to the limited extent of securing Modvat credit relief, while the additional claim was declined for want of any apparent record-based error.

Ratio Decidendi: An omission in a final order to grant a relief that had been raised and was supported by the record may be corrected as an error apparent on the face of the record, and Modvat credit on duty-paid inputs can be allowed even if the declaration procedure was not followed, provided eligibility is established.

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