Modvat credit cannot be denied for misplaced originals when duty-paid receipt and use of inputs are undisputed.

Modvat credit could not be denied merely because the original duty-paying documents were later misplaced, where the receipt and use of the inputs and their duty-paid character were not disputed. Credit had been taken on prescribed documents, and the assessees produced photocopies of the bill of entry, transporter records, receipt registers, and other supporting material after the originals were lost. Since Rule 57A read with Rule 57G required duty-paid inputs supported by specified documents, the absence of originals for defacement did not by itself justify disallowance. The credit claim was therefore upheld.

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Issues: Whether Modvat credit on inputs could be denied merely because the original duty-paying documents were misplaced after the credit had been taken, when the receipt of goods and the duty-paid nature of the inputs were not disputed.

Analysis: Modvat credit under Rule 57A read with Rule 57G of the Central Excise Rules, 1944 depends upon receipt of inputs under specified duty-paying documents. The appellants had initially taken credit on the basis of the prescribed documents and later produced photocopies of the bill of entry, transporter documents, receipt records, and other supporting material after the originals were misplaced. The Department did not dispute the receipt of the goods in the factory, their use for the intended purpose, or the duty-paid character of the inputs. On these facts, the absence of the original documents for defacement did not warrant denial of credit.

Conclusion: The appellants were entitled to Modvat credit and the denial of credit was unsustainable.

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