Modvat credit cannot be denied for dealer non-registration when duty-paid inputs are undisputed and supply is otherwise valid.

Modvat credit cannot be denied where the duty-paid character of inputs is undisputed and the only objection is that the invoice-issuing dealer was not registered under Rule 57GG, because dealer registration is a procedural requirement rather than a substantive condition. Transitional notifications and the Board's circular were aimed at easing implementation, and the dealer's failure to register within the extended period could not be attributed to the user of the inputs. In the absence of any allegation of non-duty-paid or clandestinely removed goods, denial of credit on that ground was unwarranted.

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Issues: Whether Modvat credit could be denied merely because the dealer issuing the invoices was not registered under Rule 57GG of the Central Excise Rules, when the duty-paid character of the inputs was not in dispute.

Analysis: The Tribunal applied its earlier view that registration of dealers under Rule 57GG is a procedural requirement and not a substantive condition for availing Modvat credit. It further noted that the transitional notifications and the Board's circular were intended to ease difficulties in implementation, and that a dealer's failure to register within the extended period could not be visited upon the user of the inputs. Since there was no allegation that the goods were non-duty paid or clandestinely removed, and the supply through the authorised dealer was not disputed, denial of credit on the ground of non-registration was unwarranted.

Conclusion: The denial of Modvat credit was not sustainable, and the appeal was allowed.

Ratio Decidendi: Where the duty-paid nature of inputs is undisputed, Modvat credit cannot be denied for a merely procedural lapse such as non-registration of the dealer issuing the invoice.

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