Modvat credit cannot be denied solely because the declaration was filed after input use when statutory conditions were otherwise satisfied.

Modvat credit could not be denied merely because the declaration was filed after receipt or use of inputs, where the prescribed conditions under Rule 57G(5) were otherwise satisfied. The statutory scheme required the Assistant Commissioner to be satisfied that the conditions for credit were met; in the absence of any recorded dissatisfaction on those conditions, timing of the declaration alone was not a valid ground for refusal. On that basis, denial of credit and penalty was held unsustainable, and the assessee was found entitled to the credit with consequential relief.

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Issues: Whether Modvat credit could be denied merely because the declaration was filed after receipt and use of the inputs, when the conditions under Rule 57G(5) were otherwise satisfied.

Analysis: Rule 57G(5) contemplates grant of credit on satisfaction of the prescribed conditions by the Assistant Commissioner. The objection that the inputs had already been used before filing the declaration did not, by itself, justify denial of credit. In the absence of any recorded dissatisfaction by the Assistant Commissioner on the relevant statutory conditions, the credit could not be refused solely on the timing of declaration and utilisation of inputs.

Conclusion: The appellants were entitled to Modvat credit and the denial of credit and penalty was unsustainable.

Final Conclusion: The appeal succeeded and the impugned orders were set aside with consequential relief.

Ratio Decidendi: Where the statute makes the grant of Modvat credit dependent on the Assistant Commissioner's satisfaction of prescribed conditions, credit cannot be denied merely because the declaration was filed after receipt or use of inputs, absent a recorded statutory dissatisfaction.

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