Cenvat credit on capital goods cannot be denied for procedural lapse where substantive eligibility and actual use are proved.

Cenvat credit on capital goods cannot be denied merely because the prescribed declaration was not filed or procedural requirements were delayed, where receipt, installation and use of the goods are established and depreciation has not been claimed. The operative principle is that a procedural lapse does not defeat credit when substantive eligibility is otherwise proved and the omission does not affect the genuineness or use of the capital goods. On those facts, the credit was held allowable.

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Issues: Whether Cenvat credit on capital goods could be denied solely for non-filing of the prescribed declaration and delay in following the procedural requirements under the credit rules, despite receipt, installation, use of the capital goods and proof that no depreciation had been claimed.

Analysis: The capital goods were received in the factory, installed and used in manufacture, and their availability was verified. It was also certified that depreciation had not been claimed. The denial rested on non-compliance with the declaration procedure under the relevant excise rules. The governing principle applied was that where substantive eligibility for credit is otherwise established, a procedural lapse such as failure to file an advance declaration should not defeat the credit, particularly when the defect does not affect the genuineness or use of the capital goods.

Conclusion: The procedural irregularity was not a valid ground to disallow the credit, and the assessee was entitled to avail Cenvat credit.

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