Modvat credit on invoices from a 100% export oriented unit depends on valid issue under excise rules.

Modvat credit on invoices issued by a 100% export oriented unit was treated as unavailable where the supplier was not competent to issue the invoice under the excise rules. The invoice was considered valid only if issued in accordance with Rule 100E of the Central Excise Rules, and the document relied on did not meet that requirement. Because the invoice lacked the necessary legal basis and could not support duty credit, the credit taken on its strength was held unsustainable and the assessee's claim failed.

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Issues: Whether Modvat credit could be availed on the strength of an invoice issued by a 100% export oriented unit, and whether such invoice was valid for the purpose of credit.

Analysis: The credit was denied on the footing that the supplier, being a 100% export oriented unit, was not competent to issue the invoice under the relevant excise rules. The order also noted that the duty reflected in the invoice was not supported by any corresponding tariff basis. The invoice was held to be valid only if issued in accordance with Rule 100E of the Central Excise Rules, and the document relied upon did not satisfy that requirement. As the invoice was not proper, the credit taken on its strength was unsustainable.

Conclusion: The Modvat credit was not admissible and the assessee's claim failed.

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