Modvat credit cannot be denied on a technical registration timing issue where invoices and duty-paid goods satisfy the governing circulars.

Modvat credit could not be denied merely because the supplying dealers were registered after the cut-off date where the invoices and goods otherwise satisfied the governing circulars. Circular No. 76/94 accepted documents issued by a registered dealer before registration if the dealer was otherwise eligible under earlier circulars, and the invoices here conformed to Circular No. 15/94 and Circular No. 21/94. With no adverse finding against the dealers and no showing that the goods had escaped duty, refusal of credit on a technical ground would defeat the object of the scheme. The assessee was therefore entitled to the credit.

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Issues: Whether Modvat credit could be denied merely because the supplying dealers were registered after the cut-off date, when the invoices and the goods otherwise satisfied the governing circulars and the goods were duty paid.

Analysis: The credit related to November and December 1994, while the dealers were registered only in January and February 1995. The governing clarification was Circular No. 76/94 dated 08.11.1994, which accepted documents issued by a registered dealer prior to registration if the dealer was otherwise eligible to issue such invoices under the earlier circulars. The invoices were found to conform to Circular No. 15/94 dated 30.03.1994 and Circular No. 21/94 dated 12.05.1994, and there was no adverse finding against the dealers. The goods were also not shown to have escaped duty, so denial of credit on a purely technical ground would defeat the object of the scheme.

Conclusion: Modvat credit could not be denied on the sole ground that the dealers were registered after the cut-off date, and the assessee was entitled to the credit.

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