Procedural compliance under Modvat: penalty set aside where bona fide efforts to file and deface invoices were shown.

Penalty for non-filing of duty-paying invoices with RT-12 returns under the Modvat procedure was held unwarranted where the assessee had made repeated bona fide efforts to get the invoices defaced through the jurisdictional Superintendent and the department was aware of those efforts. The lapse was treated as a procedural irregularity, not conduct justifying penal action, and the penalty order was set aside.

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Issues: Whether penalty was justified for not submitting duty-paying invoices with RT-12 returns under the Modvat procedure.

Analysis: Though Rule 57G(4) required invoices to be filed with returns, the appellants had made repeated efforts to have the original invoices defaced and had corresponded with the jurisdictional Superintendent for that purpose. The record showed that the department was aware of these efforts, and the authorities did not properly guide the appellants or record any finding that the correspondence was not received. In the peculiar facts, the lapse was treated as a procedural irregularity rather than conduct warranting penal action.

Conclusion: Penalty was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the penalty order was quashed; the stay petition stood disposed of consequentially.

Ratio Decidendi: Where an assessee has substantially complied with the procedural requirement and has made bona fide, repeated efforts to secure compliance through the proper officer, penalty for a procedural default is not warranted in the absence of a justified basis for penal action.

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