Modvat credit cannot be denied for a dealer-side invoice irregularity when the recipient holds a valid document and no action exists against the dealer.

Modvat credit cannot be denied to a recipient merely because of an alleged irregularity at the dealer's end, where the dealer's invoice is regular on its face and no discrepancy in the document itself is shown. The text states that the denial rested only on an objection that the dealer was not entitled to issue the invoice from the registered godown because the manufacturer's original invoice stood in the dealer's head office name. In the absence of any adjudication or action against the dealer, and where the assessee's credit is supported by a proper document, the denial of credit is unsustainable and consequential relief follows.

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Issues: Whether Modvat credit could be denied to the assessee on the basis of an alleged irregularity in the dealer's invoice and in the absence of any action taken against the dealer.

Analysis: The invoice issued by the registered dealer was found to be regular on its face and no discrepancy in the document was pointed out by the Revenue. The denial of credit rested only on an allegation that the dealer was not entitled to issue the invoice from the registered godown because the manufacturer's original invoice stood in the name of the dealer's head office. No adjudication had been shown to have been taken against the dealer, and the credit taken by the assessee was supported by a proper document. Credit cannot be denied to the recipient merely for an irregularity attributed to the dealer's end when the invoice is otherwise valid and no action has been established against the dealer.

Conclusion: The denial of Modvat credit was unsustainable and the appeal was allowed with consequential relief.

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