Modvat credit cannot be denied for minor procedural defects where duty-paid inputs were received, recorded and used as required.

Modvat credit could not be denied where the inputs were received, duty-paid, recorded and used for the intended manufacture, and the department had been kept informed. The dispute concerned only procedural objections under Rule 57G, including alleged defects in the declaration and the use of an invoice marked by hand as duplicate for transporter. Because the substantive conditions for credit were satisfied and the procedural lapses were minor, they were treated as substantially complied with. The position also aligned with the cited circular stating that technical defects in the declaration should not by themselves defeat credit.

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Issues: Whether Modvat credit could be denied for alleged defects in the declaration under Rule 57G and for the use of an invoice marked by hand as duplicate for transporter, when the inputs were received, recorded and used for the specified purpose and the department was kept informed of the facts.

Analysis: The appellant had filed an initial declaration and later a revised declaration, while the inputs remained in stock and the departmental officer had been apprised of the position. The dispute was confined to procedural objections relating to completeness of the declaration and the form of the invoice. The substantive facts necessary for availment of credit were not disputed, namely receipt of specified inputs, duty payment, and their use in the manufacture of final products. In such circumstances, the essential requirements were treated as substantially complied with and minor procedural lapses could not justify denial of Modvat credit. The departmental stand was also inconsistent with the cited circular clarifying that credit should not be denied merely on account of technical defects in the declaration.

Conclusion: Denial of Modvat credit was not sustainable and the appeal was allowed in favour of the assessee.

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