Modvat credit cannot be denied for initial dealer non-registration when registration was obtained before the extended cut-off date.

Modvat credit could not be denied merely because dealers were unregistered when invoices were issued, where those dealers obtained registration before the extended cut-off date. The Tribunal applied the departmental circular extending registration time up to 31-12-94 and held that invoices from such dealers could not be rejected solely for initial non-registration. As the invoices remained valid duty-paying documents for Rule 57G purposes, the proposed recovery under Rule 57-I read with Section 11A was unsustainable, and the assessee was entitled to the credit.

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Issues: Whether Modvat credit could be denied on the ground that the invoices were issued by dealers who were unregistered at the time of issuance, when those dealers were registered before the extended cut-off date.

Analysis: The credit was initially disallowed on the premise that invoices issued by unregistered dealers were not valid duty paying documents under Rule 57G, and recovery was proposed under Rule 57-I read with Section 11A. The Tribunal noted the departmental circular dated 8-11-94 extending the date for registration of unregistered dealers up to 31-12-94. Since the dealers from whom the goods were received had obtained registration before that date, the invoices could not be rejected solely on the ground of initial non-registration. In that situation, the invoices remained acceptable for Modvat credit purposes.

Conclusion: The denial of Modvat credit was unsustainable and the assessee was entitled to the credit.

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