Modvat credit cannot be denied solely for delayed installation intimation where substantial compliance is shown.

Late intimation of installation of capital goods, by itself, does not justify denial of Modvat credit where the evidence shows installation and credit taken in close proximity and there is substantial compliance with the essential legal requirements. The mere timing defect in giving notice was not treated as sufficient to defeat the credit claim, and the assessee was held entitled to Modvat credit.

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Issues: Whether Modvat credit on capital goods could be denied merely because intimation of installation of the machine was given late.

Analysis: The only ground for denial of credit was the alleged delay in intimating installation of the capital goods. The materials showed that the machine was installed and the credit was taken in close proximity to the installation. Even apart from the dispute about postal proof, the governing principle applied was that delay in giving intimation, by itself, does not justify denial of credit where there is substantial compliance with the essential requirements of law.

Conclusion: The denial of Modvat credit was unsustainable and the assessee was entitled to the credit.

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