Modvat credit cannot be denied for a cured invoice defect when substantive eligibility conditions are satisfied.

Modvat credit could not be denied where invoices described the supplier as a first stage dealer instead of a second stage dealer, because the invoices were pre-authenticated and the misdescription was later cured by the supplier's certificate. The inputs were duty paid, received in the factory, and used in manufacture, so the defect was only technical and did not affect substantive eligibility. Credit was therefore admissible, and the penalty was unsustainable.

---

---

Issues: Whether Modvat credit could be denied on invoices describing the supplier as a first stage dealer instead of a second stage dealer, and on the allegation of non-pre-authentication, when the defect was subsequently corrected and the substantive requirements were otherwise satisfied.

Analysis: The invoices were found to be pre-authenticated by the proper officer, and that finding had not been disturbed in appeal. The only remaining defect was the misprinted description of the dealer status on the invoices. That defect stood cured by a certificate from the supplier confirming that the invoices were issued as second stage dealer invoices and that the printed words were erroneous. There was no dispute as to the duty-paid character of the inputs, their receipt in the factory, or their use in manufacture, so the denial of credit was based only on a technical infirmity that had been rectified.

Conclusion: Modvat credit could not be denied on the said grounds, and the credit was admissible to the assessee; the penalty was also unsustainable.

Final Conclusion: The appeal succeeded, the credit was restored, and the penalty was set aside.

Ratio Decidendi: A minor defect in Modvat documentation that is cured and does not affect the substantive eligibility conditions cannot justify denial of credit.

---