Modvat credit cannot be denied for technical document defects when receipt and duty-paid character of goods are undisputed.

Modvat credit could not be denied on merely technical defects in supporting documents where the goods were provisionally released, the bonds were later cancelled, and there was no dispute about receipt or duty-paid character. Cuttings in the bills of entry did not justify disallowance in the absence of evidence that the goods were not sold, received, or duty paid. Likewise, an invoice in the name of the head office did not defeat credit where the department had been informed and the goods were endorsed to the manufacturing unit. The denial of credit on both counts was set aside.

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Issues: (i) Whether Modvat credit could be denied on the basis of bills of entry bearing cuttings in the importer's name and address when the goods were provisionally released, later bonds were cancelled, and receipt and duty-paid character of the goods were not disputed. (ii) Whether Modvat credit could be denied on an invoice issued in the name of the head office when the head office had intimated the department and endorsed the goods to the manufacturing unit.

Issue (i): Whether Modvat credit could be denied on the basis of bills of entry bearing cuttings in the importer's name and address when the goods were provisionally released, later bonds were cancelled, and receipt and duty-paid character of the goods were not disputed.

Analysis: The disputed goods were released provisionally on execution of bonds and the bonds were later cancelled, which indicated that the department had not doubted the genuineness of the bills of entry. There was no material showing that the importer had not sold the goods or that the goods were not duty paid. Mere cuttings in the documents, in the absence of any challenge to receipt, use, or duty-paid nature of the goods, could not justify denial of credit.

Conclusion: Modvat credit on the bills of entry was admissible and the disallowance was unsustainable.

Issue (ii): Whether Modvat credit could be denied on an invoice issued in the name of the head office when the head office had intimated the department and endorsed the goods to the manufacturing unit.

Analysis: The invoice stood in the name of the head office, but prior intimation regarding the head office and manufacturing unit was on record. There was no evidence that the goods were not received by the manufacturing unit or that they were non-duty paid. In those circumstances, the invoice being in the name of the head office was only a technical defect and did not defeat the credit claim.

Conclusion: Modvat credit on the invoice was admissible and the disallowance was unsustainable.

Final Conclusion: The denial of Modvat credit on both counts was set aside and the assessee's claim succeeded with consequential relief.

Ratio Decidendi: Modvat credit cannot be denied on a merely technical defect in the supporting document when receipt of goods and their duty-paid character are not disputed and the substantive conditions for credit are satisfied.

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