Modvat credit cannot be denied for lack of dealer receipt where goods moved directly and transaction substance was preserved.

Modvat credit cannot be denied merely because the dealer issuing the invoice did not physically receive the goods, where the governing clarification under Rule 57GG permits dealer invoices and prescribed records even for direct movement from the manufacturer to the consuming unit. The document notes that an invoice naming another consignee did not change the substance of the transaction, as the dealer had arranged the supply and the goods were ultimately routed through the job worker to the assessee. On these facts, denial based only on the absence of physical receipt by the dealer was not sustainable, and the credit was treated as admissible.

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Issues: Whether Modvat credit could be denied to the assessee merely because the dealer issuing the invoice had not physically received the goods and the manufacturer's invoice named another consignee.

Analysis: The governing clarification under Rule 57GG stated that physical movement of goods was not linked to the issuance of dealer invoices and that a dealer could issue invoices and maintain the prescribed register even where the goods were routed directly from the manufacturer to the consuming unit. On the facts, the additional circumstance that the manufacturer's invoice named S. Kumar Synfab, Dewas as consignee did not alter the substance of the transaction, since the Mumbai dealer had arranged the supply and the goods were ultimately sent to the job worker and then to the assessee. The denial of credit rested only on the absence of physical receipt by the dealer, which could not override the clarification.

Conclusion: The Modvat credit was held to be admissible and the denial of credit was set aside.

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