Modvat credit on duty-paid coils remained allowable despite receipt in sheet form and missing procedural documents.

Modvat credit was treated as admissible where duty-paid HR/CR coils were received and accounted for as sheets, because broad weight correlation supported the link between the inputs and the goods on which credit was claimed. The Tribunal held that absence of some transport documents, octroi receipts, or other procedural records did not by itself justify denial when the department failed to prove that the sheets were not made from duty-paid coils. A prescribed procedure was treated as directory in this factual setting, not a stand-alone ground to disallow credit where receipt and correlation were established.

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Issues: Whether Modvat credit was admissible on duty-paid HR/CR coils where the goods received in the factory were sheets, and whether credit could be denied for want of transport documents, octroi receipts, or other procedural records.

Analysis: The appellant had purchased duty-paid coils and received sheets in the factory, while the assessee had no in-house facility to cut coils into sheets. The record showed a broad correlation between the weight of the duty-paid coils and the sheets on which credit was taken. Non-production of some transport documents, alleged discrepancies in accounts, absence of octroi receipts, and an isolated vehicle-capacity objection were not sufficient to dislodge the claim, especially when the department did not establish that the sheets were not made out of duty-paid coils. The Tribunal also treated the earlier decision on a similar factual matrix as supporting the assessee's case and held that non-observance of a prescribed procedure could not, by itself, justify denial of credit where receipt and correlation were shown.

Conclusion: Modvat credit was admissible to the assessee, and denial of credit on the ground that sheets were received instead of coils, or on alleged procedural deficiencies, was not justified.

Ratio Decidendi: Where duty-paid input goods are shown by broad correlation to have been received and accounted for, Modvat credit cannot be denied merely because the goods were received in a different physical form after processing or because certain procedural documents are not produced, unless the department proves that the credit was wrongly taken.

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