Modvat credit cannot be denied on technical defects when duty-paid inputs and use in manufacture are prima facie established.

Modvat credit was treated as unavailable only on technical objections such as invoice description defects, duplicate invoices, cuts on invoices, and missing transport particulars, but the record showed that the inputs were duty-paid, received in the factory, and used in manufacture. In the light of the amended Rules 57G and 57T, these circumstances were sufficient to establish a strong prima facie case. On that basis, waiver of pre-deposit was granted and recovery was stayed pending disposal of the appeal.

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Issues: Whether the appellant made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of the duty demand and penalty arising from denial of Modvat credit.

Analysis: The demand arose from denial of Modvat credit on several objections relating to invoice description, use of duplicate invoices, cuts on invoices, and omission of transport particulars. The objections were found to be technical in nature, while the record indicated that the inputs were duty paid, received in the factory, and used in manufacture. In the light of the amended provisions of Rules 57G and 57T, the appellant was held to have a strong prima facie case.

Conclusion: Waiver of pre-deposit was granted and recovery was stayed till disposal of the appeal.

Ratio Decidendi: Modvat credit should not be denied on purely technical objections where receipt of duty-paid inputs and their use in manufacture are prima facie established.

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