Modvat credit on original invoice allowed where inputs were received and used, despite loss of duplicate invoice and incomplete departmental verification.

Modvat credit cannot be denied merely because the duplicate invoice was lost in transit where receipt and consumption of the duty-paid inputs are undisputed. The assessee had informed the jurisdictional Assistant Commissioner in writing, sought permission to take credit on the original invoice, and the department itself did not complete the verification contemplated by the Board circular. In these circumstances, rejection of credit only for non-production of an FIR, driver's affidavit, or prior formal permission was unjustified, and credit on the original invoice was allowed.

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Issues: Whether Modvat credit could be denied merely because the duplicate copy of the invoice was lost in transit and the assessee had taken credit on the original invoice without FIR, affidavit of the driver, or prior formal permission, when the receipt and consumption of inputs were not disputed.

Analysis: The input receipt and consumption in the factory were undisputed. The assessee had informed the jurisdictional Assistant Commissioner in writing about the loss of the duplicate invoice and sought permission to avail credit on the original invoice. The departmental authorities did not respond to that request, yet later rejected the credit for non-filing of FIR and affidavit. The record also showed that the Assistant Commissioner had sought verification from the originating range, but no reply was received. In these circumstances, denial of credit solely on procedural grounds was held to be unjustified, especially when the verification contemplated by the Board circular had not been completed by the department itself.

Conclusion: Modvat credit could not be denied on the facts of the case, and the assessee was entitled to the benefit of credit on the original invoice.

Ratio Decidendi: Where receipt and consumption of duty-paid inputs are not in dispute, Modvat credit cannot be denied merely for loss of the duplicate invoice if the departmental authorities fail to carry out the prescribed verification and the assessee had already sought permission to proceed on the original invoice.

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