Procedural lapse cannot deny Modvat credit where substantial compliance and transit sale support allowance of credit.

Procedural lapses should not defeat Modvat credit where the assessee has substantially complied with the statutory requirements and the goods were sold in transit. The Tribunal applied the principle that substantive justice prevails over technical non-compliance and also relied on Circular No. 96/7/95-CX dated 13-2-1995, which supported allowance of credit in transit sale cases. Modvat credit was therefore not to be denied on the ground of procedural lapse, and the Department's appeal failed.

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Issues: Whether Modvat credit could be denied for procedural non-compliance where the goods were sold in transit and the assessee had otherwise substantially complied with the law.

Analysis: The Tribunal applied the settled approach that procedural lapses should not defeat substantive justice where the statutory requirements have been substantially complied with. It also relied on Circular No. 96/7/95-CX dated 13-2-1995, which supported allowance of credit in cases involving transit sale.

Conclusion: Modvat credit could not be denied on the ground of procedural lapse in the facts of the case, and the appeal of the Department failed.

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