Modvat credit on computer-generated invoices without pre-printed serial numbers could not be denied under the clarificatory circular.

Computer-generated invoices were accepted for Modvat credit under Rule 57GG(8) during the relevant period, and credit could not be denied merely because the stationery lacked pre-printed serial numbers. The Board's clarificatory circular reinforced that such absence was not a ground to issue show-cause notices or deny credit. A departmental trade notice could not override the statutory rule or the circular. Accordingly, the alleged procedural contravention was treated as unsustainable, and the penalty was held not sustainable.

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Issues: Whether penalty could be sustained for availing Modvat credit on computer-generated invoices that did not bear pre-printed serial numbers, in view of Rule 57GG(8) and the Board's clarificatory circular.

Analysis: Rule 57GG(8) permitted the use of invoices generated through computers during the relevant period. The Board's circular clarified that Modvat credit should not be denied merely because computerised stationery did not contain pre-printed serial numbers, and that show-cause notices on that ground should not be issued. The trade notice relied upon by the department could not prevail against the clear statutory provision and the clarificatory circular. On that basis, the alleged procedural contravention did not survive.

Conclusion: The penalty was not sustainable and the assessee succeeded on this issue.

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