Modvat and CVD credit depend on statutory proof and documentary records, not a supplier's unilateral invoice remark.

Modvat credit under Rule 57A read with Rule 57B cannot be denied merely because the supplier marked invoices as "non-modvatable" if the statutory conditions and duty-paid character of the inputs are otherwise satisfied. Minor quantity short-receipt, including differences attributable to weighment or transport losses, does not by itself defeat credit on inputs actually received and used. Credit may depend on proof of possession and production of the duty-paying document, so it was allowed only where documentary support existed. CVD credit cannot be disallowed when the bill of entry itself records assessed duty and official endorsement of payment; contemporaneous official records constitute valid proof.

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Issues: (i) Whether Modvat credit could be denied merely because the supplier marked the invoices as "non-modvatable"; (ii) whether credit was admissible where the quantity received was less than the quantity shown in the invoice; (iii) whether credit could be denied for want of production of the original invoice before the Range Superintendent; and (iv) whether CVD credit could be disallowed for want of proof of payment under the bill of entry.

Issue (i): Whether Modvat credit could be denied merely because the supplier marked the invoices as "non-modvatable".

Analysis: Credit under Rule 57A read with Rule 57B of the Central Excise Rules, 1944 depends on whether duty-paid inputs were used in or in relation to manufacture of the final product. The supplier's unilateral remark could not by itself determine the admissibility of credit. The adjudicating authority had to decide the claim on the basis of the statutory conditions and the duty-paid character of the inputs, rather than placing the burden on the buyer to seek clarification from the supplier merely because of the remark on the invoice.

Conclusion: The denial of credit on invoices marked "non-modvatable" was not sustainable.

Issue (ii): Whether credit was admissible where the quantity received was less than the quantity shown in the invoice.

Analysis: The shortage pleaded was treated as too minor to justify denial of credit, particularly where such variation could occur because of weighment differences at different weighbridges and evaporation during transport. The impugned order did not satisfactorily establish that the short receipt destroyed the claim to credit on the inputs actually received and used.

Conclusion: The disallowance of credit on the ground of short receipt of quantity was not justified.

Issue (iii): Whether credit could be denied for want of production of the original invoice before the Range Superintendent.

Analysis: In respect of the invoice for which the record showed endorsement by the Range Superintendent acknowledging Modvat credit, the existence of a prescribed duty-paying document and its production stood supported by the evidence. However, for the other invoice there was no comparable documentary support. The credit issue therefore turned on proof of possession and production of the duty-paying document.

Conclusion: Credit was admissible for the supported invoice, but not on the invoice unsupported by documentary evidence.

Issue (iv): Whether CVD credit could be disallowed for want of proof of payment under the bill of entry.

Analysis: The bill of entry itself contained the assessed duty figures and official endorsement indicating payment of CVD. That contemporaneous official record constituted documentary evidence of payment, and the authority was not justified in disregarding it on the assumption that no proof existed.

Conclusion: The denial of CVD credit was unsustainable.

Final Conclusion: The order denying credit on the disputed items could not be sustained in law, and the assessee's claim to credit was substantially accepted.

Ratio Decidendi: Modvat credit cannot be denied on the basis of a supplier's unilateral invoice remark where the statutory requirements for duty-paid inputs used in manufacture are otherwise satisfied, and contemporaneous official records must be treated as valid proof of duty payment.

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