Procedural lapse in credit availment did not deny credit, but penalty was sustained for premature claim.

A clerical lapse in taking credit on consignments before the invoice date did not justify denial where the goods were admittedly received and used in the prescribed manner. The Tribunal treated the discrepancy as a procedural irregularity, so credit on the consignments was allowed. However, the premature availment of credit remained a rule infraction, and the penalty was sustained. The assessee therefore obtained only partial relief: substantive credit was preserved, but the penal consequence for the procedural breach survived.

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Issues: (i) Whether credit taken on consignments before the date of the related invoices, but on the basis of despatch advices and after actual receipt and use of the goods, could be denied; (ii) Whether the penalty imposed for the procedural infraction was liable to be upheld.

Issue (i): Whether credit taken on consignments before the date of the related invoices, but on the basis of despatch advices and after actual receipt and use of the goods, could be denied.

Analysis: The discrepancy arose from a clerical mistake in taking credit on the basis of despatch advices bearing earlier dates than the invoices. There was no dispute about the subsequent receipt of the goods or their use in the prescribed manner. In these circumstances, the procedural lapse did not justify denial of the credit.

Conclusion: Credit on the impugned consignments was allowed in favour of the assessee.

Issue (ii): Whether the penalty imposed for the procedural infraction was liable to be upheld.

Analysis: Although the credit was allowed, the taking of credit before the invoice date constituted an infraction of the rules. The Tribunal found that this limited breach warranted a penalty notwithstanding the allowance of credit.

Conclusion: The penalty was upheld against the assessee.

Final Conclusion: The appeal succeeded to the extent of allowance of credit, but the penalty survived, resulting in only partial relief to the assessee.

Ratio Decidendi: A clerical or procedural lapse in taking credit does not by itself justify denial of credit when receipt and prescribed use of the goods are undisputed, though a penalty may still be sustained for the rule infraction.

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