Modvat credit remains admissible where delayed invoices do not prove non-duty-paid inputs and record lapses are only technical.

Modvat credit could not be denied merely because invoices were received after the inputs, where the Department produced no evidence that the inputs were non-duty paid. Receipt of goods through registered dealers and later billing in the principal manufacturer's name did not by itself defeat the credit claim. Record irregularities were treated as technical and insufficient to justify penalty. As the demand failed on merits, the extended period issue did not affect the result. Credit was therefore admissible, the demand was unsustainable, and penalty was not warranted.

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Issues: Whether Modvat credit and the consequential demand and penalty could be sustained when the inputs were received before the invoices, the Department had no evidence that the inputs were non-duty paid, and the alleged irregularities in records were only technical.

Analysis: The Tribunal held that liability to reverse credit would arise only if the inputs were shown to be non-duty paid. Mere delay in receipt of duty documents did not, by itself, establish that the inputs were not duty paid. The record did not show any evidence that the inputs were non-duty paid, and the fact that the goods were received through registered dealers and billing was done later in the name of the principal manufacturer did not destroy the credit claim. The Tribunal also treated the irregularities in maintenance of records as technical in nature and not sufficient to warrant penalty. Since the demand itself failed on merits, the question of invocability of the extended period did not alter the result.

Conclusion: The Modvat credit was held to be admissible, the demand was not sustainable, and penalty was not warranted.

Ratio Decidendi: Credit cannot be denied merely because the invoices were received after the inputs, unless it is shown that the inputs were not duty paid.

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