Modvat credit cannot be denied for procedural documentation defects when receipt and use of inputs are established.

Modvat credit could not be denied merely because the prescribed documents contained procedural defects where the inputs were actually received in the factory and used in manufacture of the final products. The Tribunal treated the dealer and manufacturer documentation requirements as procedural rather than substantive, and noted that later relaxation of the documentation regime supported preservation of the credit benefit despite technical lapses. It also recognised that relaxation could be granted where receipt and use of the goods were otherwise established. The documentation defect therefore did not disentitle the assessee to Modvat credit, and the issue was decided in its favour.

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Issues: Whether Modvat credit could be denied for defects in the documentation when the inputs had been received and used in the manufacture of final products.

Analysis: The credit was disallowed only because the documents were treated as not satisfying the prescribed formality under the Modvat provisions. There was no adverse finding that the inputs had not been received in the factory or had not been used in manufacture. The defect related to the manner in which the dealer and manufacturer documents were made out. Such requirements were treated as procedural, and the subsequent relaxation of the documentation regime supported the view that a substantive benefit should not be defeated by a technical lapse. The Tribunal also noted that the authorities could grant relaxation where receipt and use of goods were otherwise established.

Conclusion: The documentation defect did not disentitle the appellant to Modvat credit, and the issue was decided in favour of the appellant.

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