Modvat credit cannot be denied for a dealer's invoice defacement lapse when duty-paid inputs and manufacture use are undisputed.

Modvat credit under Rule 57A of the Central Excise Rules, 1944 could not be denied where the duty-paid character of the inputs, their receipt in the factory, and their use in manufacture were undisputed. The only objection was that the dealer had not got the manufacturers' invoices defaced in the jurisdictional range office, but the dealer's invoices were otherwise found defect-free and no show-cause notice had been issued to the dealer. A procedural omission of that kind, without any challenge to the substantive eligibility conditions, was insufficient to defeat the assessee's credit claim.

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Issues: Whether Modvat credit could be denied to the assessee merely because the dealer had not got the manufacturers' invoices defaced, when the duty-paid character of the inputs, their receipt in the factory, and their use in manufacture were not in dispute.

Analysis: The credit was claimed under Rule 57A of the Central Excise Rules, 1944. The duty-paid nature of the inputs was admitted, and there was no dispute regarding receipt of the goods in the factory or their use in the manufacture of final products. No defect was found in the dealer's invoices relied upon by the assessee. The only basis for denial was the dealer's omission to get the manufacturers' invoices defaced in the jurisdictional range office. Such omission, without any show-cause notice to the dealer and without any dispute on the substantive eligibility conditions, could not justify denial of credit to the assessee.

Conclusion: Modvat credit could not be denied on the ground of the dealer's procedural omission, and the issue was decided in favour of the assessee.

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