Modvat credit on original invoices upheld where duplicate duty documents were lost before production to excise authorities.

Modvat credit cannot be denied merely because duplicate invoices or challans are unavailable if the inputs were admittedly received and used in the factory and the assessee can prove receipt by reliable supporting evidence. The relevant enquiry is whether the duplicate duty-paying documents were lost before production before the excise authorities, in which case the loss is treated as occurring in transit. On that basis, original invoices, together with collateral evidence of receipt, were sufficient to support credit under the Modvat scheme, including challans governed by Rule 57F.

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Issues: Whether Modvat credit could be denied merely because the duplicate copies of the invoices and challans were lost after the inputs had been received and utilised in the factory, and whether credit could be allowed on the basis of the original invoices and supporting evidence.

Analysis: The inputs' receipt in the factory and their utilisation were not in dispute. The only objection was that the duplicate duty paying documents were not available. The relevant test was whether the loss of the duplicate invoice occurred in transit, meaning the movement of the document from the supplier to the excise office for defacement. Since the invoices had not been produced before the range office and the documents were lost before such production, the loss was treated as occurring in transit. The same reasoning applied to the challans under Rule 57F of the Modvat Rules. On that basis, the original invoices, supported by collateral evidence of receipt, were sufficient for credit.

Conclusion: The assessee was entitled to Modvat credit on the basis of the original invoices despite the loss of the duplicate documents.

Ratio Decidendi: Where duplicate duty paying documents are lost before being produced to the excise authorities, credit cannot be denied if the assessee establishes the loss in transit and proves receipt of the inputs by other reliable evidence.

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