Modvat credit on captive-used moulds cannot be denied merely for missing statutory records.

Modvat credit on alloy steel blocks was held admissible where the steel moulds manufactured from them were captively consumed in producing plastic moulded articles. The absence of entries for the moulds in RG-1 register or ER-1 returns did not, by itself, justify denial of credit, because the moulds were used in the manufacturing process and were exempted from duty under Notification No. 67/95. Non-reflection in statutory records was therefore insufficient to negate manufacture or captive consumption, and the denial of credit was unsustainable.

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Issues: Whether Modvat credit on alloy steel blocks was admissible when the steel moulds manufactured out of them were captively consumed in the manufacture of plastic moulded articles and were not reflected in statutory records.

Analysis: The appellant was engaged in the manufacture of plastic moulded articles and required steel moulds for that purpose. The absence of entries for the moulds in RG-1 register or ER-1 returns did not justify the inference that the moulds were not manufactured, since they were captively consumed and exempted from duty under Notification No. 67/95. Non-reflection in statutory records, by itself, was insufficient to deny credit when the moulds were essentially used in the manufacturing process.

Conclusion: Modvat credit was admissible and the denial of credit was unsustainable.

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