Modvat credit on original invoices cannot be denied for prior-permission lapse if duplicate invoices were lost in transit.

Modvat credit could not be denied solely because the assessee had not obtained prior permission before taking credit on original invoices where the duplicate invoices were said to have been lost in transit. Rule 57G(2A) allows credit on original invoices, subject to the Assistant Commissioner being satisfied that the duplicate copy was lost, and the lack of prior permission was treated as a procedural lapse only. Because receipt of inputs and the admissibility of credit were not in dispute, the matter required fresh examination of the evidence on loss of the duplicate invoices. The denial of credit was set aside and the issue remanded for reconsideration.

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Issues: Whether Modvat credit could be denied merely because the assessee had not obtained prior permission before availing credit on the original invoices when the duplicate invoices were stated to have been lost in transit, and whether the matter required reconsideration by the Assistant Commissioner under Rule 57G(2A).

Analysis: Rule 57G(2A) permits credit on the basis of original invoices where the duplicate copy has been lost in transit, subject to the satisfaction of the Assistant Commissioner. The assessee had not approached the Assistant Commissioner before taking credit, but the absence of prior permission was treated as a procedural lapse. The admissibility of the credit and receipt of the inputs was not in dispute, and the authority was required to examine the evidence to determine whether the duplicate invoices were in fact lost. A procedural irregularity was held not to justify denial of a substantive benefit otherwise available in law.

Conclusion: The disallowance of Modvat credit was set aside and the matter was remanded to the Assistant Commissioner for fresh decision after considering the evidence regarding loss of the duplicate invoices.

Final Conclusion: The assessee obtained relief against the impugned denial, but entitlement to credit was left for fresh adjudication on remand.

Ratio Decidendi: A procedural lapse in not obtaining prior permission cannot, by itself, defeat a substantive credit claim where the governing rule empowers the authority to verify the factual basis for the claim and grant relief if the conditions are satisfied.

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