Modvat credit cannot be denied for lost invoices or gate pass mismatch when documentary linkage and receipt of inputs are established.

Modvat credit could not be denied where the original invoice was lost in transit, because the loss of documents was a recognised contingency and credit could be regularised on certified copies or an indemnity bond after verification. The authorities had erred in treating the procedural lapse as incurable before amendment of Rule 57G. Credit was also not barred merely because of an alleged mismatch between the gate pass and invoice, since the endorsed gate pass linked the inputs to the original manufacturer and receipt of the goods was established. Credit was therefore to be allowed after documentary verification.

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Issues: Whether Modvat credit could be denied where the original invoice was lost in transit and credit was taken on the basis of alternative documents, and whether Modvat credit could be denied on the ground of alleged mismatch between the gate pass and invoice notwithstanding endorsement of the gate pass and receipt of the inputs.

Analysis: The claim of credit was rejected by the lower authorities on a mistaken view that the Assistant Collector had no power to accept the original invoice or otherwise regularise the lapse before amendment of Rule 57G. The record showed that loss of original documents in transit was a recognised contingency and that departmental instructions and trade notices provided a procedure for allowing credit on certified copies or on execution of an indemnity bond. The appellants had sought permission and the procedural defect was capable of being cured. On the second claim, the endorsed gate pass established the link with the original manufacturer, the gate pass was capable of being endorsed twice at the relevant time, and the physical receipt of inputs was not in doubt. A separate financial invoice could not, by itself, defeat credit where the documentary chain and receipt of goods were established.

Conclusion: Modvat credit could not be denied on either ground, and the matter was sent back for permitting the credit after documentary verification.

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