MODVAT credit cannot be denied for procedural defects in challans-cum-invoices when duty-paid inputs were received and used in manufacture.

MODVAT credit on challans-cum-invoices issued by a manufacturer's depot or stockyard cannot be denied merely because duty payment particulars, such as debit entry details, are missing if the prescribed inputs were received in the factory, their duty-paid character is not disputed, and they were used in manufacture. Notification No. 15/1994-C.E. (N.T.) allowed credit on such documents subject to specified particulars, but the omission was treated as a procedural defect only. Where there is no allegation of non-receipt of goods, non-payment of duty by the supplier, or diversion of inputs, substantive entitlement to credit prevails over technical lapses.

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Issues: Whether MODVAT credit could be denied on challans-cum-invoices issued by the depot of the manufacturer for want of duty payment particulars, when the goods were received and used in manufacture and the duty-paid nature of the inputs was not disputed.

Analysis: The relaxation under Notification No. 15/1994-C.E. (N.T.) permitted credit on challans-cum-invoices issued by stockyards, subject to the prescribed particulars. The absence of debit entry details in the documents was treated as a procedural defect only. There was no allegation that the goods were not received in the factory, that duty had not been paid by the supplier, or that the inputs were not used in manufacture. In these circumstances, the omission in the document did not justify denial of credit, and substantive entitlement to MODVAT credit could not be defeated by a technical lapse.

Conclusion: MODVAT credit was held admissible, and the denial of credit was unsustainable. The appeal succeeded in favour of the assessee.

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