Modvat credit cannot be denied for procedural defects when duty payment and genuine transactions are otherwise established.

Modvat credit could not be denied where the assessee relied on the original invoice because the duplicate copy had been taken away by the check-post authority. The Tribunal held that substantive entitlement to credit cannot fail on this procedural basis when duty payment and the genuineness of the transaction are otherwise established. It also treated dealer registration as a procedural requirement, so credit could not be refused merely because some invoices were issued by unregistered dealers. On both grounds, the denial of credit was unsustainable and relief was granted.

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Issues: Whether Modvat credit could be denied on the basis of original invoices where the duplicate copy had been taken away by the authorities and whether credit could be refused merely because some dealer invoices were issued by unregistered dealers.

Analysis: The appeal concerned denial of Modvat credit on seven invoices. For one invoice, the duplicate copy was not available because it had been recovered by the check-post authority, and the assessee had taken credit on the original invoice. For the remaining invoices, the objection was that the dealers were not registered. The Tribunal relied on the settled view that credit cannot be denied when the substantive conditions are satisfied and the assessee is prevented from producing the duplicate copy because it was seized by another authority. The Tribunal also treated dealer registration as a procedural requirement and held that where the transaction is genuine and the documentary and factual basis of duty payment is established, credit cannot be disallowed on a mere technical breach.

Conclusion: Modvat credit could not be denied on either ground and the assessee was entitled to relief.

Final Conclusion: The appellate order denying credit was set aside and the appeal succeeded.

Ratio Decidendi: Substantive entitlement to Modvat credit cannot be defeated by procedural irregularities or technical breaches when the transaction is genuine and the duty-paid character of the inputs is otherwise established.

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