Modvat credit on original invoice copy upheld where goods were received properly and supplier misuse could not be detected.

Modvat credit could not be denied where goods were received under a proper invoice and the recipient had no practical means of knowing whether the supplier had wrongfully taken credit on another copy. Rule 57G(6) was treated as extending the earlier mechanism that permitted credit on the original invoice in appropriate cases, and the principle was applied even where the supplier was a trader rather than a manufacturer. On the surrounding evidence, receipt of goods and compliance with the rules were established, so no contravention was made out and the Revenue's challenge failed.

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Issues: Whether Modvat credit could be allowed on the original copy of the invoice when the goods were received under the proper invoice and the recipient had no means to verify any wrongful credit-taking at the supplier's end.

Analysis: Rule 57G(6) was treated as an extension of the earlier mechanism permitting credit on the original copy in appropriate circumstances. The relevant case law was applied to hold that the principle allowing credit on original invoices where secondary evidence supports receipt of goods is not confined to supplies from a manufacturer and may extend to supplies from a trader as well. As the assessee received the goods under cover of the proper invoice and had no way to know whether the supplier had taken credit on a wrong copy, no contravention of the rules was established.

Conclusion: Modvat credit was rightly allowed and the Revenue's challenge failed.

Ratio Decidendi: Where goods are received under a proper invoice and the recipient has no practical means of detecting a supplier's wrongful use of another invoice copy, Modvat credit cannot be denied merely because credit was taken on the original copy, if the surrounding evidence supports receipt of goods and compliance with the rules.

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