Modvat credit on T.R. 6 Challan accepted where duty was paid later and no other prescribed duty document existed.

Modvat credit was treated as admissible where duty on captively consumed unbranded chewing tobacco was paid later through a T.R. 6 Challan and no other prescribed duty-paying document was available. The credited goods arose in the course of manufacturing branded chewing tobacco, exemption had been withdrawn for the captively consumed unbranded product, and the Department did not show use of any impermissible document. A prior decision on different facts was held inapplicable, and the disallowance of credit was set aside.

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Issues: Whether Modvat credit was admissible on the strength of T.R. 6 Challan when duty on captively consumed unbranded chewing tobacco was paid subsequently and no other duty-paying document was available.

Analysis: The appellants were manufacturing branded chewing tobacco and the unbranded tobacco arising in the process was captively consumed. During the relevant period, exemption for such captively consumed unbranded chewing tobacco was withdrawn, duty became payable, and the assessee deposited the duty in the bank under T.R. 6 Challan. In such circumstances, there was no other document evidencing payment of duty. The credit was taken in the relevant register, and the Department did not show that any impermissible document had been used. The earlier decision refusing credit on different facts did not govern the present case.

Conclusion: Modvat credit on the basis of T.R. 6 Challan was admissible and the assessee succeeded on the issue.

Final Conclusion: The order disallowing credit was set aside and the appeal was allowed.

Ratio Decidendi: Where duty on captively consumed goods is paid subsequently and no other prescribed duty-paying document exists, T.R. 6 Challan can be accepted as a valid basis for Modvat credit.

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