Transitional Modvat credit cannot be refused for unregistered dealer invoices where duty-paid goods and substantive entitlement are established.

Transitional Modvat credit on gunny bags could not be denied merely because the invoices were issued by an unregistered dealer, where the goods had already been found duty-paid and the dispute related only to invoice form and registration status. Rule 57H was read as a beneficial provision intended to extend credit on inputs already received and stored in the factory, so a rigid requirement of prior trader registration would defeat its purpose. Fresh remand for re-verification was unnecessary on the facts recorded, and the substantive entitlement to transitional credit was upheld.

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Issues: Whether transitional Modvat credit on gunny bags could be denied only because the invoices were issued by an unregistered dealer, and whether the matter should be remanded for fresh verification of the duty-paid nature of the goods.

Analysis: Rule 57H was intended to extend credit on inputs already received and stored in the factory. A construction that insists on prior registration of the trader for an input that was not earlier eligible would make the provision ineffective, because the trader could not reasonably comply in anticipation of a later inclusion of the input. The duty-paid character of the goods had already been examined, and the objection before the adjudicating authority was confined to the form of the invoice and the absence of registration. Remand was therefore unnecessary.

Conclusion: The denial of credit was unjustified, and the assessee was entitled to the transitional Modvat credit.

Final Conclusion: The Revenue's challenge failed, the order granting credit was sustained, and the appeal stood rejected.

Ratio Decidendi: A beneficial fiscal provision meant to extend transitional credit cannot be construed so rigidly as to defeat its operation merely because a procedural requirement could not be complied with in advance, where the substantive entitlement is otherwise established.

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