Modvat credit on photocopies accepted where originals were lost, no fraud was alleged, and duty-paid inputs were established.

Modvat credit under Rule 57G was treated as admissible where the assessee could establish the duty-paid character of the inputs through photocopies of the Bill of Entry and Proforma B after the originals were lost following submission for defacement. The available documents were not challenged as false, and no fraud, misuse, or prior double availment of credit was alleged. As the goods were raw materials or components and the supporting material otherwise showed duty payment, credit could not be denied merely because the original prescribed documents were unavailable. The denial of credit was therefore unsustainable and consequential relief followed.

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Issues: Whether Modvat credit could be allowed on the basis of photocopies of the Bill of Entry and Proforma B when the originals had been sent for defacement and were subsequently not available, and when the department did not allege fraud, misuse, or prior double availment of credit.

Analysis: Modvat credit under Rule 57G of the Central Excise Rules, 1944 depends on proof of the duty-paid character of the inputs and the reliability of the supporting documents. The loss of original import documents after submission for defacement was found to be a plausible explanation. The photocopies were not challenged as inauthentic, and no allegation of fraud or misuse was made at either stage. The goods were raw materials or components, not consumer goods, so the possibility of misuse by another person was negligible. The cited precedents supported the view that where the originals are lost and the duty-paid nature can otherwise be established, credit cannot be denied merely because the prescribed original documents are unavailable.

Conclusion: Modvat credit was admissible to the assessee on the basis of the photocopies, and the denial of credit was unsustainable.

Final Conclusion: The orders denying credit were set aside and the assessee was granted the benefit of Modvat credit with consequential relief.

Ratio Decidendi: Where the authenticity of the available documents is not disputed, no fraud or prior misuse is alleged, and the duty-paid character of the inputs is otherwise established, Modvat credit cannot be denied merely because the original prescribed documents are unavailable due to loss after defacement.

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