Mandatory documentary proof for Modvat credit defeats a procedural lapse argument where prescribed duty documents are absent.

Modvat credit was available only where the inputs were supported by the documents prescribed in Notification No. 198/86, such as a Gate Pass, AR-1, Bill of Entry, or another document specified by the Central Board of Excise and Customs evidencing duty payment. A certificate issued by the Range Superintendent was not treated as a substitute. The documentary condition in the proviso was mandatory, so the defect could not be treated as a mere procedural lapse, and credit was denied.

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Issues: Whether Modvat credit could be allowed when the inputs were received without the documents prescribed under Notification No. 198/86, and whether the lapse was merely procedural.

Analysis: The notification required the intermediate products to be accompanied by a Gate Pass, AR-1, Bill of Entry, or another document specified by the Central Board of Excise and Customs evidencing payment of duty. The certificate produced by the Range Superintendent was not treated as a specified document. The documentary requirement in the proviso was held to be mandatory, and the Tribunal held that it could not ignore the scope of the notification by characterising the defect as procedural.

Conclusion: The denial of Modvat credit was upheld and the issue was decided against the assessee.

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