Modvat credit on endorsed manufacturer invoices was inadmissible where prescribed invoice-chain requirements were not met.

Modvat credit was confined to the documents prescribed under Rule 57G and Notification No. 15/94-C.E. (N.T.), namely the dealer's invoice or the manufacturer's duplicate invoice. An endorsed original manufacturer's invoice, passed through intervening dealers without their own invoices, broke the required chain of verification and correlation and was not a mere procedural defect. Credit could therefore not be taken on such endorsed invoices, and the denial of Modvat credit was upheld.

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Issues: Whether Modvat credit could be validly taken on endorsed invoices of the manufacturer, when Notification No. 15/94-C.E. (N.T.) prescribed invoice of the dealer or manufacturer's duplicate invoice as the recognised document.

Analysis: Under Rule 57G, the Board was empowered to prescribe documents for Modvat credit. Notification No. 15/94-C.E. (N.T.) treated dealer's invoice and manufacturer's invoice as valid documents and contemplated a chain of invoices from successive sellers and purchasers for verification and correlation. An endorsed manufacturer's invoice, passed through intervening dealers without issuance of their own invoices, disrupted that chain and could not be treated as a mere procedural irregularity. Since the notification required credit to be taken in the prescribed manner, endorsement of the original invoice by dealers did not satisfy the legal requirement.

Conclusion: Modvat credit on the endorsed invoices was not admissible and the denial of credit was upheld.

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