Input credit on imported goods received in instalments remains admissible where the lapse is merely procedural and eligibility is otherwise satisfied.

Credit on imported inputs received in instalments was held admissible where duty-paid documents supported the goods, the staggered receipt arose from storage constraints, and the lapse was only procedural. The underlying eligibility for input credit was treated as satisfied, so credit could not be denied merely because the entire quantity had not been physically received at once. The Tribunal also found no material for mala fides and held that harsh adverse remarks against departmental officers were unwarranted because they had only taken an erroneous view on credit eligibility.

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Issues: (i) Whether credit on imported inputs taken before physical receipt of the entire quantity, where the inputs were received in instalments and the lapse was procedural, was admissible; (ii) whether the adverse remarks made against departmental officers were justified.

Issue (i): Whether credit on imported inputs taken before physical receipt of the entire quantity, where the inputs were received in instalments and the lapse was procedural, was admissible.

Analysis: The inputs were covered by duty paying documents and were received piecemeal because of storage constraints. The procedural deviation had already been noticed and penalised by the Assistant Commissioner. The disputed credit related to receipt of inputs in instalments for use in manufacture, and the Tribunal found no basis to treat the matter as involving any culpable conduct. The departmental view on admissibility of credit was found to be erroneous, but the lapse remained procedural.

Conclusion: Credit was admissible and the assessee succeeded on merits.

Issue (ii): Whether the adverse remarks made against departmental officers were justified.

Analysis: The Tribunal found that the officers had only taken an erroneous view on eligibility of credit and that there was no material suggesting mala fides. Harsh criticism of the statutory officers was therefore held to be unwarranted.

Conclusion: The adverse remarks were unjustified and were disapproved.

Final Conclusion: The departmental challenge failed, while the assessee's entitlement to credit was upheld and the remarks against the officers were held to be unwarranted.

Ratio Decidendi: Where duty-paid inputs are received in instalments and the deviation is only procedural, credit cannot be denied merely for the timing of receipt if the substantive eligibility is otherwise satisfied.

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