Modvat credit cannot be denied for procedural delay when invoices were valid and inputs were duty paid for manufacture.

Modvat credit could not be denied merely because it was taken after six months where the invoices were issued by dealers who were registered only later and the governing notification and Board instruction allowed a liberal approach. Notification No. 64/94-C.E. and the corresponding instruction under Rule 57H permitted acceptance of invoices issued by dealers registered up to 31-12-1994. As the delay was linked to the dealers' later registration and the assessee's subsequent knowledge of that fact, and there was no allegation that the inputs were not duty paid or were not used in dutiable manufacture, the delay was treated as a procedural irregularity only. Credit was therefore admissible.

---

---

Issues: Whether Modvat credit could be denied for being taken beyond six months where the invoices were issued by dealers who were registered only subsequently and the relevant notification and departmental instructions permitted a liberal approach.

Analysis: Notification No. 64/94-C.E. and the corresponding Board instruction under Rule 57H permitted acceptance of invoices issued by dealers registered up to 31-12-1994. The delay in taking credit was found to be attributable to the later registration of the dealers and the appellants' subsequent awareness of that registration. In the absence of any allegation that the inputs were not duty paid or were not used in the manufacture of dutiable final products, the delay was treated as a procedural deviation and not a substantive breach.

Conclusion: The denial of credit was not justified and the appellants were entitled to relief.

---