Modvat credit cannot be denied to a bona fide purchaser for a dealer's transport-document lapse.

Modvat credit could not be denied to a purchaser assessee where duty-paid goods were received and used in the manufacture of dutiable final products, and the invoices were issued under Rule 57GG. The purchaser was not required to obtain or verify the duplicate transporter's copy from the manufacturer, and bona fide reliance on the dealer's invoices protected the assessee from a later procedural lapse by the dealer. Board circulars did not support denial of credit in these circumstances. Credit was therefore admissible despite the dealer's non-compliance with transport-document formalities.

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Issues: Whether Modvat credit could be denied to the purchaser assessee on the ground that the registered dealer from whom the goods were purchased failed to produce the duplicate transporter's copy.

Analysis: The receipt of duty-paid goods and their use in the manufacture of dutiable final products was not disputed. The invoices were issued under Rule 57GG, and the purchaser was not required to obtain or verify the duplicate transporter's copy from the manufacturer. The purchaser having acted bona fide on the strength of the dealer's invoices could not be penalised for a subsequent lapse discovered in the dealer's compliance. The Board circulars relied upon did not authorise denial of credit to such a purchaser.

Conclusion: Modvat credit was admissible to the assessee and could not be denied on account of the dealer's procedural default.

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