Modvat credit cannot be denied for procedural invoice defects when receipt and manufacturing use of inputs are proved.

Procedural defects in duty-related invoices did not by themselves bar Modvat credit where receipt of inputs and their use in manufacture were established. The rubber-stamped invoice for oil and grease, together with proof of receipt and supplier confirmation, was sufficient, so denial of credit was unsustainable. For furnace oil, lack of pre-authentication and the missing "duplicate for transporter" marking were treated as curable irregularities, and proportionate reversal for township electricity use was accepted, so only the reversed portion remained excluded. The impugned denial was substantially set aside and the penalty was also quashed.

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Issues: (i) Whether Modvat credit on oil and grease could be denied merely because the invoices were rubber-stamped as "duplicate for transporter" instead of producing a duplicate copy for assessee; (ii) Whether Modvat credit on furnace oil could be denied on the grounds of non-pre-authenticated invoices, absence of the "duplicate for transporter" marking, and partial use of electricity generated from such input for the township.

Issue (i): Whether Modvat credit on oil and grease could be denied merely because the invoices were rubber-stamped as "duplicate for transporter" instead of producing a duplicate copy for assessee.

Analysis: The goods were actually received under the impugned invoices and the invoices bore a prominent rubber stamp indicating their altered routing. The receipt of the consignments was not in doubt, and the supporting certificate from the supplier further confirmed the duty-paying nature of the documents. In these circumstances, the invoice defect was treated as not defeating credit.

Conclusion: The denial of credit on oil and grease was unsustainable and the credit was allowed in favour of the assessee.

Issue (ii): Whether Modvat credit on furnace oil could be denied on the grounds of non-pre-authenticated invoices, absence of the "duplicate for transporter" marking, and partial use of electricity generated from such input for the township.

Analysis: The input was used for steam generation and for captive electricity production, while only a portion of the generated electricity was supplied to the township. The assessee had reversed credit on a proportionate basis for such township use. The remaining objections relating to pre-authentication and marking of invoices were treated as procedural and not fatal where the substantive receipt of goods and use in manufacture were established.

Conclusion: Credit on furnace oil could not be wholly denied, and only the amount already reversed towards township use remained excluded in favour of the assessee.

Final Conclusion: The impugned order was set aside to the extent of the disputed denials, Modvat credit was substantially sustained, and the penalty was also set aside.

Ratio Decidendi: Procedural defects in duty-related invoices do not by themselves bar Modvat credit where receipt and use of inputs are established, and proportionate reversal suffices when part of the input is attributable to non-eligible use.

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