Modvat credit cannot be denied for a register lapse when physical receipt is accepted and no mala fides are found.

Under the Modvat scheme, credit could not be denied solely because inputs were not entered in RG 23A Part I where physical receipt was accepted and the adjudicating authority found no mala fides. The Tribunal treated the omission as a technical, staff-level lapse and noted that the factual finding on receipt, based on corroborating records, should not be lightly disturbed absent fraud or deliberate suppression. On that basis, the denial of credit on a record-maintenance defect was unsustainable, and the assessee was entitled to relief.

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Issues: Whether Modvat credit could be denied merely because the inputs were not entered in RG 23A Part I register, when their physical receipt was accepted and the adjudicating authority had found no mala fides.

Analysis: The appeal concerned a technical lapse in maintenance of statutory records under the Modvat scheme. The adjudicating authority had accepted the physical receipt of the inputs on the basis of correlating documents and had treated the omission in the register as a staff lapse without mala fides. The appellate review authority interfered mainly on the footing that actual receipt and use had not been sufficiently verified and that entries in the prescribed stock records were necessary. The Tribunal held that, once the adjudicating authority had examined the factual issue and recorded satisfaction regarding receipt, that factual finding could not be lightly disturbed in the absence of any allegation of fraud or deliberate suppression.

Conclusion: Modvat credit could not be denied on this technical ground, and the assessee was entitled to relief.

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