"There was absolutely no conscious intention to manipulate the language or to obfuscate or to create a misunderstanding as to what they might refer to," he told the inquiry.
Cab driver claim
Earlier on Tuesday, Adam Holloway, a Conservative opposition MP, said the 45-minute claim in the dossier had come from a taxi driver.
"It had originated from an emigre taxi driver on the Iraqi-Jordanian border, who had remembered an overheard conversation in the back of his cab a full two years earlier," a report by Holloway said.
It added that the government had ignored warnings about the the reliability of the intelligence and the information "went on to become one of the central planks of the dodgy dossier".
A previous investigation into pre-war intelligence in Britain said blaming Scarlett for the dossier "would have been unfair in respect of what were collective shortcomings".
Scarlett also told Tuesday's hearing that information in the days leading up to the March 2003 invasion suggesting Iraq had disassembled missiles and did not have warheads that could carry chemical or biologicial weapons was not "game-changing".
He said the information was taken to be part of the then Iraqi ruler Saddam Hussein's policy of concealment.
Scarlett, despite criticisms levelled at him over the Iraq war, went onto become the head of Britain's Secret Intelligence Service (MI6) in 2004, which he held until last month.
Critics have suggested the inquiry is not qualified to find the truth, but John Chilcott, the inquiry chairman, has promised there will be no whitewash.
Tony Blair, Britain's prime minister during the invasion, is expected to appear at the hearings early next year, with a report on the war issued by the end of 2010.