ORDER
Gowri Shankar, Member (T)
1. The notice issued to the appellant proposed denial of modvat credit that it took on various counts. In the order impugned in the appeal the Commissioner has denied the credit on two counts. This is questioned in the appeal by the assessee.
2. The first relates to credit of Rs. 2750/- taken of the duty paid on isopropyl acetate. This chemical was received by the appellant after it was reprocessed by this supplier, the consignment first supplied having been rejected by the appellant as not conforming to its requirements. The notice proposed denial on the ground that the photo copy of the gate pass that was issued when the goods were originally cleared without payment of duty did not accompany the gate pass was subsequently issued after reprocessing which does not show payment of any duty, no doubt for the reason that the reprocessing did not amount to manufacture. In his order, the Commissioner has denied the credit solely on the ground that credit was taken on the basis of the nil duty paid gate pass that was issued after the goods were processed. He has thus gone beyond the show cause notice.
3. The other issue for determination is the eligibility to credit of the duty paid on four consignments of Rs. 41,665/-. The credit has been denied on the ground that it was taken prior to receipt of the goods in the factory. The gap between the date of taking credit and the date of receipt of the goods is not more than three days in respect of three consignments and being thirteen days for the fourth. The counsel for the appellant says that the delay might have taken place because sometimes consignments get held up on the way and may have been received later than the receipt of the documents. He however says that it is not disputed that the goods were in fact received and utilised in the factory. The annexure to the show cause notice itself indicates the date of receipt of the goods and date of taking credit, and specifically alleges that credit was taken before receipt of the goods. Thus, he says, the receipt of the goods and their utilisation is not in dispute. Therefore, there is no contravention of the rules. The provisions of Rule 57G provided only that credit has to be taken of the amount shown on the duty paying documents under the cover of which the goods are received. It was not a requirement at the relevant time, that the duty paying document must be accompanied with the goods.
4. The departmental representative contends that the credit has been taken prior to receipt of the goods and this is not permitted in law.
5. I am not able to accept this claim. The rule, as it stood at the relevant time, did not specifically prohibit credit in such a situation. In the normal course, the goods would on arrival be accompanied by a duty paying document. This is in fact a consequence of the requirement in Rule 52A which provides that when the goods are despatched by the manufacturer, they must be accompanied by a gate pass. It appears that in the cases before me, the manufacturer may be liable to action for not sending the goods along with gate pass. However, as the counsel for the appellant explains, the notice does not allege, or the Commissioner find, that the goods which were received were different from those which were described in the gate passes, the duty paid on which was taken as credit. The notice in fact specifically makes an allegation that credit was taken prior to receipt of the goods. There is thus a clear acceptance of the fact that the goods were in fact received. This being the situation, there is in fact no contravention of the rules. The contention of the counsel for the appellant in this regard has to be accepted. I must not be understood as saying that every case where there is a lapse of time between the receipt of the goods and taking of credit, would be covered by this situation. It would be reasonable to say that if there is a gap between the receipt of the goods and document, that documents were in fact relating to the goods in question and it was upon the assessee to establish that it did. In this case, however, this is not in dispute, and as we have noted, the notice proceeds on the basis that the goods were in fact received shortly after the receipt of the documents. In that situation, there is no warrant for denying the credit, because there has been no contravention specifically of any rule. I am also guided by a large number of decisions of the Tribunal and the circular of the Board, that credit cannot be denied for mere procedural contraventions rather than substantial compliance, credit would be available. In this case the contravention is purely technical and not one of significance of procedure or one of substance.
6. The appeal is accordingly allowed and the impugned order set aside.