Modvat credit requires registered dealer invoices and proof of duty payment; unregistered dealer documents were insufficient here.

Modvat credit was required to rest on invoices issued by a registered dealer or other prescribed duty-paying documents. Where credit was taken on invoices from unregistered dealers or depots, and the assessee produced no RG 23D record or other evidence to prove duty payment, the credit was held inadmissible. The earlier view accepting unregistered dealer invoices was treated as confined to its own factual period and not as a general relaxation of the registration requirement. The order allowing credit was therefore unsustainable on the stated facts.

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Issues: Whether Modvat credit could be allowed on the basis of invoices issued by unregistered dealers or depots in the absence of proof that the goods were covered by a valid duty paying document.

Analysis: The applicable notification and rules required registration of the person issuing invoices for the purpose of Modvat credit. The earlier view that invoices issued by an unregistered dealer could be accepted was confined to the transactional period considered in that case. Here, the credit was availed in 1996 on invoices issued by unregistered dealers, and no RG 23D record or other evidence was produced to show that the goods were duty paid.

Conclusion: Modvat credit was not admissible on such invoices and the order allowing credit was unsustainable.

Final Conclusion: The Revenue's challenge succeeded and the allowance of Modvat credit was set aside.

Ratio Decidendi: Where the relevant Modvat scheme requires invoices to be issued by a registered dealer and the assessee fails to establish duty payment through the prescribed records, credit cannot be allowed on invoices issued by an unregistered dealer.

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