Modvat credit cannot be denied for a minor invoice defect when duty-paid inputs and genuine documents are shown.

Modvat credit should not be denied for a minor procedural defect in an invoice copy where the inputs were duty paid, used in manufacture, and the transaction appeared genuine. The record showed production of the duplicate and original invoices, while no cross-verification was made with the sales tax authorities, transporter, or consignor. In the absence of any real doubt about bona fides or document authenticity, the lapse was treated as a technical irregularity rather than a substantive deficiency. On that basis, denial of credit and penalty were held to be unjustified.

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Issues: Whether Modvat credit and penalty could be denied on account of a minor procedural lapse in the invoice copy when the inputs were duty paid, used in manufacture, and the supporting documents appeared genuine.

Analysis: The assessee had produced the duplicate invoice said to have been checked by the Sales Tax Department in transit and also the original invoice. The authorities did not undertake cross-verification with the sales tax authorities, transporter, or consignor, and the record did not give rise to any real doubt about bona fides or the correctness of the transaction. In such circumstances, the lapse was treated as a minor technical defect. The principle applied was that a substantial benefit otherwise due should not be denied merely for a procedural infraction, especially where the explanation is satisfactory and the genuineness of the documents is not doubtful.

Conclusion: Denial of Modvat credit and imposition of penalty were not justified; the assessee succeeded.

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