Modvat credit survives later cancellation of dealer registration when invoices were genuine and verified before authorities.

Modvat credit cannot be denied merely because a dealer's registration was cancelled later, where the invoices were issued when the dealer was registered and were verified by the excise authorities. In the absence of evidence that the cancellation operated retrospectively, or any finding that the invoices were bogus, fictitious, or otherwise invalid, the assessee's credit entitlement remains intact. Subsequent cancellation alone is insufficient to disturb credit already supported by genuine documents produced before the authorities and defaced after verification.

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Issues: Whether Modvat credit could be denied merely because the registered dealer's registration was cancelled subsequently.

Analysis: The invoices were issued by a dealer who was registered at the relevant time, and the documents had been produced before the Central Excise authorities and defaced after verification. There was no material showing that the cancellation of the dealer's registration operated retrospectively, nor any finding that the invoices issued prior to cancellation were bogus, fictitious, or invalid. In the absence of such a finding, the assessee's entitlement to credit could not be disturbed on the basis of later cancellation alone.

Conclusion: Modvat credit could not be disallowed on the ground of subsequent cancellation of the dealer's registration, and the appeal was allowed in favour of the assessee.

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