Modvat credit cannot be denied for a procedural lapse when inputs were received, used, and bill of entry conditions were met.

Modvat credit on additional duty of customs was available where the inputs were actually received and used by the assessee, even though a procedural condition prescribed by the Central Board of Excise and Customs was not strictly fulfilled. The operative requirement under Rule 57G was treated as satisfied once the goods reached the assessee with the bill of entry, and the importer certified that no credit had been taken on the bill of entry. Credit could not be denied on a merely procedural lapse when substantive receipt and utilisation of the inputs were undisputed.

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Issues: Entitlement to Modvat credit on additional duty of customs where the inputs were received by the assessee but a procedural condition was not strictly fulfilled.

Analysis: The consignment was sold by the importer to the assessee, the goods were actually received and utilised, and the importer certified that no credit had been taken in respect of the bill of entry. The requirement under Rule 57G stood satisfied once the goods reached the assessee with the bill of entry. Credit could not be denied merely because a procedural condition prescribed by the Central Board of Excise and Customs had not been satisfied, especially when substantive receipt and use of the inputs were not in dispute.

Conclusion: The assessee was entitled to Modvat credit and the denial of credit was unsustainable.

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