Modvat credit cannot be denied for a procedural lapse when entitlement is otherwise established and Rule 57E is inapplicable.

Modvat credit could not be denied merely because it was not taken under Rule 57E of the erstwhile Central Excise Rules when that rule applied only to later variation in duty paid on inputs and was not attracted on the facts. The credit had already been allowed after verification of supporting evidence, and the dispute concerned only the procedural mode of availing credit. Where entitlement to credit was otherwise established, a procedural lapse alone did not justify interference with the Commissioner (Appeals)' order. The credit was therefore sustained in favour of the assessee.

---

---

Issues: Whether Modvat credit could be denied on the ground that it should have been taken under Rule 57E of the erstwhile Central Excise Rules, and whether a mere procedural lapse justified interference with the credit allowed by the Commissioner (Appeals).

Analysis: The credit had been allowed after verification of the evidence, and the dispute was confined to the procedural manner in which the credit was availed. The reasoning accepted that Rule 57E applied to cases involving subsequent variation in duty paid on inputs, which was not the situation here. It was also noted that denial of credit on a mere procedural lapse was not justified where entitlement was otherwise established.

Conclusion: The credit could not be denied on the procedural objection raised by Revenue, and the order allowing credit was sustained in favour of the assessee.

---