Procedural relaxation and private stock records defeat penalty for missing daily RG 23A Part I entries.

Where an assessee substantially complied with a procedural relaxation under a trade notice and maintained private stock accounts showing receipt, use and stock of inputs, a mere failure to make daily entries in the statutory RG 23A Part I register did not justify penalty. The adjudicating authority accepted that Modvat credit had been availed within the trade notice framework, and no independent ground for punishment was shown. The technical defect in statutory record-keeping was therefore insufficient, by itself, to sustain punitive action, and the penalty was set aside in favour of the assessee.

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Issues: Whether penalty was sustainable when the assessee maintained private stock accounts under a trade notice but did not make daily entries in the statutory RG 23A Part I register.

Analysis: The assessee was availing the procedural relaxation under the relevant trade notice and had maintained private records reflecting receipt, utilisation and stock of inputs. The adjudicating authority itself accepted that the assessee had acted within the parameters of the trade notice and that no fault could be found with the availment of Modvat credit merely because daily entries were not reflected in RG 23A Part I. In the absence of any other ground justifying penalty, the technical defect in the statutory register did not warrant punitive action.

Conclusion: The penalty was not sustainable and was set aside in favour of the assessee.

Ratio Decidendi: Where the assessee substantially complies with a procedural relaxation and maintains verifiable private accounts, a mere technical lapse in statutory record-keeping does not, by itself, justify imposition of penalty.

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