Modvat credit on genuine private challans upheld where duty payment and use of inputs were established.

Modvat credit cannot be denied solely because duty-paid inputs were supported by private challans rather than the prescribed Rule 57G documents, where duty payment is undisputed and the documents are genuine. The Punjab and Haryana HC applied the principle that technical defects in the form of document do not defeat credit if the duty-paid character of the inputs, their receipt in the factory, and their use in manufacture are established. On the facts, the challans were not found to be fake and duty payment was properly certified, so credit was held admissible.

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Issues: Whether Modvat credit could be denied merely because it was taken on the basis of private challans instead of the prescribed documents under Rule 57G of the Central Excise Rules, 1944.

Analysis: The governing principle applied was that where duty payment is not disputed and the documents relied upon are genuine and not fraudulent, credit on duty-paid inputs cannot be denied merely on a technical objection as to the form of document. The Court followed earlier decisions holding that if the duty-paid character of the inputs, their receipt in the factory, and their use in manufacture are established, Modvat credit is admissible. On the facts, the private challans were not found to be fake and there was proper certification that duty had been paid.

Conclusion: Modvat credit was admissible on the strength of the private challans, and the question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Where duty payment is undisputed and the supporting documents are genuine, Modvat credit cannot be denied solely because the documents are not the prescribed documents, if the duty-paid inputs and their use in manufacture are otherwise established.

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