Modvat credit allowed where duty-paid inputs and their use in manufacture were undisputed, despite a technical document objection.

Modvat credit could not be denied merely because the inputs were supported by cash memos issued by a public sector undertaking, where receipt of duty-paid inputs and their use in manufacture were undisputed. The Tribunal treated such documents as acceptable and held that a technical objection to the form of documentation could not defeat substantive entitlement to credit. Credit was therefore admissible and the revenue appeal was rejected.

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Issues: Whether modvat credit could be denied on the ground that cash memos issued by a public sector undertaking were not proper documents for availment of credit, when receipt of inputs, payment of duty and use of the inputs in manufacture were not disputed.

Analysis: The appellate authority had allowed credit relying on Tribunal decisions treating such cash memos as acceptable documents. The relevant facts remained undisputed, namely receipt of inputs, duty payment on them and their use in the manufacture of final products. In such circumstances, denial of credit on a technical objection as to the form of documents was held to be unwarranted, and hyper-technicalities were not to defeat substantive entitlement to credit.

Conclusion: Modvat credit was held admissible and the revenue appeal was rejected.

Ratio Decidendi: Where receipt of duty-paid inputs and their use in manufacture are undisputed, modvat credit cannot be denied merely on hyper-technical objections to the supporting documents.

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