Modvat credit on self-issued invoices was held admissible where goods were cleared for further manufacturing use.

Modvat credit could not be denied merely because the manufacturer issued invoices to itself for clearance of goods to a job worker and for use in the manufacturing or packing process. An invoice issued by a manufacturer under the Central Excise Rules, 1944 was a valid duty-paying document, and Rule 57G(2) did not exclude self-issued invoices where the goods were cleared for captive or further manufacturing use. The denial under Rule 57G(3) was therefore unsupported, and the credit was held admissible.

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Issues: Whether Modvat credit could be denied merely because the invoices were issued by the manufacturer to itself for clearance of goods to a job worker and for further use in the manufacturing or packing process.

Analysis: The only objection to the credit was that the invoices were self-issued. The applicable rule treated an invoice issued by a manufacturer under the Central Excise Rules, 1944 as a valid duty-paying document. Nothing in Rule 57G(2) excluded invoices issued to self where goods were cleared for captive use or for further manufacturing activity. The denial based on Rule 57G(3) was therefore unsupported on the facts and the statutory scheme.

Conclusion: The denial of Modvat credit was unsustainable and the credit was admissible in favour of the assessee.

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