Modvat credit on repaired capital goods was allowed where duty-paid clearance under a valid invoice supported the claim.

Modvat credit on capital goods was admissible where the goods were returned after repairs by a job worker under a duty-paid statutory invoice. The tribunal noted that duty had been paid on the full assessable value, including job charges, and that the record did not support denial of credit merely because the goods were old or used. Since the Department had itself required duty payment on clearance from the job worker, the activity was treated as manufacture, and a valid invoice supported the claim. Credit was therefore allowable on receipt within time, and the denial of credit and penalty could not be sustained.

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Issues: Whether Modvat credit under Rule 57Q was admissible on capital goods returned after repairs by a job worker under a duty-paid invoice issued under Rule 52A.

Analysis: The credit was taken on the strength of a valid invoice evidencing payment of duty on the returned capital goods. The duty had been paid on the total assessable value, including the value of the goods and the job charges, and the record did not support the objection that credit was barred merely because the goods were old or used. The Department itself had insisted on duty payment on clearance from the job worker, thereby treating the activity as manufacture. Once duty had been paid and a valid document issued, the appellants were entitled to take credit on receipt of the capital goods within the prescribed time.

Conclusion: Modvat credit under Rule 57Q was admissible, and the denial of credit and penalty could not be sustained.

Ratio Decidendi: Credit on capital goods is allowable when duty has been paid on their clearance under a valid statutory invoice, and the recipient cannot be denied credit merely because the goods were repaired or because the duty component included job charges.

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