Modvat credit cannot be denied for delayed registration where the application was timely and transitional documents supported entitlement.

Modvat credit could not be denied solely because dealer registration was granted after the cut-off date, where the registration application had been sent in time and the goods were received under challans during the transitional period. Applying Rule 174(9) of the Central Excise Rules, the Tribunal treated the dealer as registered from the date of dispatch of the application and accepted that procedural delay by the department should not defeat substantive credit entitlement. The credit benefit was therefore admissible, and the denial was unjustified.

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Issues: Whether Modvat credit could be denied merely because the dealer's registration was granted after the relevant cut-off date, when the application for registration had already been sent and the goods were received under challans during the transitional period.

Analysis: The relevant facts showed that the dealer had applied for registration within time and the department had not acted on the application promptly. In the circumstances, the Tribunal applied Rule 174(9) of the Central Excise Rules and treated the dealer as having been registered from the date of dispatch of the application. The Tribunal also relied on the transitional nature of the scheme and the principle that substantive credit benefits should not be defeated by procedural delay when the registration was eventually granted and the goods were procured for job work on departmental documents.

Conclusion: The denial of Modvat credit was not justified and the benefit was held admissible in favour of the assessee.

Final Conclusion: The appeal succeeded on the footing that procedural delay in registration could not defeat the substantive entitlement to Modvat credit during the transitional regime.

Ratio Decidendi: A substantive tax credit benefit cannot be denied merely because departmental registration was completed later, where the application was made in time and the facts justify deemed or effective registration during the transitional period.

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