Procedural irregularity in Modvat records did not defeat substantive credit where receipt of capital goods was undisputed.

An interpolation in the RG 23C Part II entry was treated as a procedural irregularity, not a ground to deny substantive Modvat credit, where the declaration for capital goods was filed on the date of receipt, receipt of the goods was undisputed, and credit was taken after the Bill of Entry was received. The discrepancy was viewed as arising from error and ignorance in record maintenance rather than deliberate misconduct. Modvat credit was allowed, while the penalty was reduced to a token amount.

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Issues: Whether Modvat credit could be denied on account of interpolation in RG 23C Part II entry, and whether the penalty required reduction in the facts of the case.

Analysis: The declaration for capital goods was filed on the date of receipt of the goods, and there was no dispute that the goods were received on that date. The credit was taken after receipt of the Bill of Entry. Although the alteration in the record should not have been made, the surrounding facts showed that the discrepancy was attributable to error and ignorance in maintenance of records rather than deliberate misconduct. A mere procedural irregularity of this kind was not treated as sufficient to deprive the assessee of the substantive Modvat benefit otherwise available, though it justified some penalty.

Conclusion: Modvat credit was allowed, and the penalty was reduced to a token amount.

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