Modvat credit cannot be denied solely for lack of prior permission when invoice loss is established and reported to the department.

Modvat credit could not be denied merely because prior permission of the Excise authorities had not been obtained where the duplicate invoice was lost after credit was taken and the loss was duly established. The appellant had taken credit on the strength of the duplicate invoice, promptly informed the department of the loss, and also lodged a police report; these facts were undisputed. The earlier requirement to prove loss to the satisfaction of the competent authority was met on the record, so denial based only on absence of prior permission was unsustainable. The issue was therefore decided in favour of the assessee.

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Issues: Whether Modvat credit could be denied merely because the duplicate copy of the invoice was lost after the credit had been taken and prior permission of the Excise authorities had not been obtained.

Analysis: The appellant had taken credit on the strength of the duplicate invoice and had informed the Central Excise authorities about the loss on 6-8-1999, also lodging a police report on 9-8-1999. These facts were not disputed. The earlier decision on loss of invoice in transit required the manufacturer to establish the loss to the satisfaction of the competent authority, but the present case showed that the loss was duly reported and proved after the credit was taken. The denial was based only on the absence of prior permission, without considering the established loss and the contemporaneous intimation to the department.

Conclusion: Modvat credit could not be denied merely for want of prior permission once the loss of the duplicate invoice was established; the issue was decided in favour of the assessee.

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