Capital goods credit cannot be denied for delayed departmental verification when the assessee complied and the delay was official

Credit on capital goods under Rule 57Q could not be denied merely because the declaration was verified after the prescribed time, where the assessee had filed the declaration, sought departmental verification within time, and repeatedly followed up while the delay arose from the department's inaction. The operative principle was that a taxpayer who has complied with the required intimation and facilitated verification should not lose substantive credit because the remaining step depended on official action. On that basis, delayed verification was treated as insufficient ground to refuse the credit, and the appeal was allowed.

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Issues: Whether credit on capital goods could be denied merely because it was taken after the date prescribed in Notification No. 16/94-C.E. (N.T.), when the assessee had filed the declaration and sought departmental verification within time but the officer failed to complete the verification promptly.

Analysis: Rule 57Q required intimation of receipt of capital goods before installation so that the department could verify the goods with the documents. The assessee filed the declaration, requested verification, and followed it up, but the departmental officer did not act within a reasonable time. The credit was taken only after the assessee had waited for the verification and had installed the goods. Where the assessee has done what was required of it and the remaining step depended on departmental action, the assessee cannot be deprived of the substantive benefit because of official delay.

Conclusion: The credit could not be denied on the ground of delayed verification by the department, and the appeal was allowed.

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