Procedural lapse in job-work intimation cannot deny Modvat credit where inputs were sent and returned and revenue was protected.

Under the amended Modvat regime, prior permission for sending inputs to job workers was no longer required; only intimation to the department with dated acknowledgement remained necessary. Where the inputs were in fact sent for job work and returned, and the department was already aware of the arrangement through earlier permission, the lapse in furnishing fresh intimation was treated as procedural. Because the rule's object of monitoring movement of inputs and protecting revenue was otherwise achieved, Modvat credit could not be denied on this ground and penalty was not justified. The impugned order was therefore unsustainable and set aside.

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Issues: Whether Modvat credit could be denied and penalty imposed for failure to furnish the prescribed intimation before sending inputs to job workers, where the inputs were actually sent and returned.

Analysis: The requirement of prior permission had ceased under the amended regime, and what remained necessary was only intimation to the department with dated acknowledgement. Although the intimation was not given, the goods were in fact sent to job workers and returned, and the department was already aware of the arrangement through the earlier permission. The object of the rule, namely monitoring the movement of inputs and safeguarding revenue, had therefore been achieved, so the lapse was procedural and did not justify denial of credit.

Conclusion: Modvat credit could not be denied on this ground, and penalty was not warranted.

Final Conclusion: The impugned order was unsustainable and was set aside, with the appeal succeeding in full.

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