Modvat credit cannot be denied for a procedural lapse where entitlement accrued, subject to verification of input receipt and use.

Modvat credit could not be denied merely because the assessee invoked Rule 57H after having already made an earlier declaration, where the underlying entitlement had otherwise accrued. The procedural defect was not enough to defeat a substantive excise credit claim, and the department had to verify from records whether the inputs were actually received and utilised before granting relief. The matter therefore required reconsideration on the factual question of receipt and utilisation, rather than rejection solely on the procedural route adopted.

---

---

Issues: Whether Modvat credit on the disputed inputs could be denied merely because the assessee invoked Rule 57H despite having made an earlier declaration, and whether the substantive benefit had to be preserved subject to verification of receipt and utilisation of the inputs.

Analysis: The declaration of inputs had been made well before the controversy, and the entitlement to Modvat credit had already arisen. Although the assessee adopted an incorrect procedural route under Rule 57H, the substance of the claim could not be ignored. The ruling relied on the principle that admissible credit, once otherwise established, cannot be defeated by procedural inadequacies. At the same time, the department was entitled to examine whether the inputs were physically received and used, as such factual verification could be undertaken from records and registers.

Conclusion: The denial of credit solely on the procedural defect was unsustainable, and the matter required reconsideration by the jurisdictional authority after verification of the records relating to receipt and utilisation of the inputs.

Ratio Decidendi: A substantive excise credit benefit cannot be denied for a procedural lapse where the underlying entitlement has already accrued, though the department may verify the factual receipt and utilisation of the inputs before granting relief.

---