Modvat credit cannot be denied for lost duplicate invoices when substantive duty-paid receipt conditions are otherwise satisfied.

Modvat credit could not be denied on a purely technical objection where the assessee took credit on original invoices after the duplicate copies were lost in transit, provided the competent authority was satisfied that the inputs were duty paid, received in the factory, and used in manufacture. The court read the procedural invoice requirement with the beneficial exception allowing credit on originals in such circumstances, and held that a rigid construction would defeat genuine credit claims and the anti-fraud purpose of the rule. On the facts, the substantive conditions were undisputed, so the credit was admissible and the revenue challenge failed.

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Issues: Whether Modvat credit could be denied merely because the assessee took credit on original invoices instead of duplicate copies, where the duplicate copies were lost in transit and the substantive conditions for credit were satisfied.

Analysis: The procedural rule governing Modvat credit had to be read with the enabling exception permitting credit on original invoices when the duplicate copy was lost in transit, subject to the Assistant Commissioner being satisfied that the inputs were received in the factory and the duty had been paid on them. The provision was intended to prevent misuse and fraud, but being part of a beneficial scheme, it was not to be applied by a rigid technical construction so as to defeat genuine credit claims. The record showed concurrent findings that the duty-paid character of the inputs and their receipt and use in manufacture were not in dispute.

Conclusion: The requirement relating to duplicate invoices was not treated as fatal in the facts of the case, and Modvat credit was held admissible to the assessee.

Final Conclusion: The appeals failed because the denial of Modvat credit was not justified on merits, and the revenue's challenge did not survive as a substantial question of law.

Ratio Decidendi: Where the substantive conditions for Modvat credit are satisfied and the loss of the duplicate invoice in transit is established to the satisfaction of the competent authority, credit cannot be denied on a purely technical lapse in documentation.

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