Modvat credit cannot be denied for missing RG-23B Part I entry when receipt, credit entry, and manufacture use are undisputed.

Modvat credit could not be denied solely because the inputs were not entered in RG-23B Part I, where receipt of the goods, credit in RG-23B Part II, and use in manufacture were all undisputed. The omission was treated as a defect in record maintenance, not as evidence that the inputs were not received or utilised, and there was no allegation of a false entry. On that basis, the denial of credit was unsustainable, and the assessee was entitled to the Modvat credit and consequential relief.

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Issues: Whether Modvat credit could be denied merely because the inputs were not entered in RG-23B Part I, when receipt of the goods, credit in RG-23B Part II, and use in manufacture were not disputed.

Analysis: The denial rested only on the omission to make an entry in one part of the record. The receipt of goods, the credit entry in RG-23B Part II, and the subsequent accounting in the return were all accepted, and there was no allegation that the entry was false or that the inputs were not received or used in manufacture. In these circumstances, the omission in RG-23B Part I was treated as a matter of record maintenance and not as a ground to defeat the credit.

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

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