Modvat credit and document loss in factory: prima facie entitlement supported waiver of pre-deposit and stay of recovery.

Receipt of inputs in the factory under the prescribed invoice was treated as the governing requirement for Modvat credit, and the later loss of duplicate supporting documents inside the factory was not, on a prima facie view, sufficient to defeat that credit claim. The tribunal therefore found a prima facie case for interim relief where the departmental objection rested on loss of the documents after receipt rather than non-receipt in proper form. Waiver of pre-deposit was granted and recovery of duty and penalty stayed, subject to keeping a specified amount unutilised in the Modvat account.

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Issues: Whether the assessee was entitled to waiver of pre-deposit and stay of recovery of duty and penalty when the duplicate invoices supporting Modvat credit were allegedly lost after receipt of the inputs in the factory.

Analysis: The order noted that the notice and the adjudicating authority themselves proceeded on the basis that the duplicate documents were lost in the factory and not in transit. The proviso to sub-rule (2) of Rule 57G required receipt of inputs in the factory under cover of the prescribed invoice or other documents, and on a prima facie view, subsequent loss of those documents after receipt would not by itself disentitle the assessee from credit. Since the objection in the impugned order went beyond that basis, a prima facie case for relief was made out, subject to freezing of a specified amount in the Modvat account.

Conclusion: Waiver of pre-deposit was granted and recovery of the duty and penalty was stayed on the condition of keeping a specified amount unutilised in the Modvat account.

Ratio Decidendi: Where inputs are received in the factory under the prescribed invoice, subsequent loss of the supporting documents in the factory does not, on a prima facie view, defeat entitlement to Modvat credit for the purpose of interim relief.

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