Modvat credit cannot be denied for wrong RG-23A entry where duty-paid inputs and statutory conditions are otherwise satisfied.

Modvat credit under Rule 57G could not be denied merely because duty-paid inputs were entered in the wrong part of RG-23A instead of the prescribed form. The substantive entitlement to credit depended on receipt of duty-paid inputs and satisfaction of the other statutory conditions; the incorrect placement of the entry did not defeat those requirements. The defect was treated as a procedural irregularity only, since no benefit was obtained by recording the entry in Part I rather than Part II. Credit was therefore held to remain available to the assessee.

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Issues: Whether Modvat credit could be denied merely because the inputs were entered in the wrong part of RG-23A and not in the statutory form as prescribed under Rule 57G of the Central Excise Rules, 1944.

Analysis: Rule 57G required the manufacturer to follow the prescribed procedure, maintain RG-23A in Parts I and II, and satisfy the conditions for taking credit on duty-paid inputs. The admitted position was that the inputs had been entered in the register, but in the wrong part. The decisive question was whether such misplacement defeated the substantive entitlement to credit. The Court held that the entry defect did not affect receipt of duty-paid inputs or the fulfilment of the other statutory conditions. Since no benefit was gained by placing the entry in Part I instead of Part II, the defect was only a procedural irregularity.

Conclusion: Modvat credit could not be denied on this ground, and the answer to the reference was in favour of the assessee and against the Revenue.

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