Modvat credit on capital goods parts and original invoice upheld where notice was given and no rejection followed.

Modvat credit was treated as admissible on items forming part of capital goods used in manufacture under Rule 57Q, following the broader view that parts integrated with capital goods qualify for credit; the assessee's claim was allowed. Modvat credit was also allowed on the original invoice where the duplicate copy was lost, the assessee had given timely intimation, and the department did not reject the request within the stipulated time, so the procedural objection could not defeat credit. On both counts, the Revenue's challenge failed and the allowance of credit was affirmed.

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Issues: (i) Whether Modvat credit was admissible on items claimed to be parts of capital goods under Rule 57Q of the Central Excise Rules, 1944. (ii) Whether Modvat credit could be taken on the original copy of the invoice after loss of the duplicate copy, where prior intimation had been given and no adverse response was received.

Issue (i): Whether Modvat credit was admissible on items claimed to be parts of capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The larger bench view had overruled the earlier restrictive approach and recognized that parts and items forming part of capital goods are eligible for Modvat credit when used in relation to manufacture of the final product. On the facts, the disputed items were found to be parts of capital goods.

Conclusion: Modvat credit was admissible and the assessee's claim was rightly allowed.

Issue (ii): Whether Modvat credit could be taken on the original copy of the invoice after loss of the duplicate copy, where prior intimation had been given and no adverse response was received.

Analysis: The assessee had informed the competent authority about the loss of the duplicate invoice and sought permission to use the original copy. No rejection was communicated within the stipulated time under the Board's circular, and receipt and use of the goods were not disputed. In these circumstances, the procedural objection could not defeat credit.

Conclusion: Modvat credit on the original invoice was rightly allowed.

Final Conclusion: The order allowing Modvat credit on both counts was affirmed, and the Revenue's appeal was dismissed.

Ratio Decidendi: Where goods are established to be parts of capital goods used in manufacture, Modvat credit is allowable; and where the duplicate invoice is lost but the assessee gives timely intimation and the department does not reject the request, credit cannot be denied merely on the basis of the original invoice.

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