Modvat credit remains available despite invisible processing loss in inputs sent to job processors.

Modvat credit could not be denied merely because inputs sent for processing suffered shortage or invisible loss during manufacture of intermediate products. The inputs were cleared to processors under the applicable Modvat procedure, and the assessee had disclosed that some material loss would occur in processing. Following an earlier Tribunal ruling on identical facts, the loss was treated as not defeating credit eligibility. The denial of credit was therefore unsustainable, and the assessee's claim succeeded.

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Issues: Whether the assessee was entitled to Modvat credit despite shortage or invisible loss in the inputs sent to processors for manufacture of intermediate products.

Analysis: The inputs were sent to processors under the relevant Modvat procedure, and the appellant had disclosed that the processing would involve some loss of material. The dispute was whether duty credit could be denied on the ground that part of the input was lost invisibly during processing. Following the Tribunal's earlier decision on identical facts, the issue was treated as already settled in favour of the assessee.

Conclusion: The denial of credit was unsustainable and the appeal was allowed.

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