Modvat credit cannot be denied for minor input shortage or a procedural invoice defect where substantive entitlement is established.

Modvat credit was treated as unavailable to be denied where the input shortage was minor, attributable to dryage or handling loss, and the duty shown on the invoice had already been paid; the substantive entitlement to credit remained intact because the credit claimed did not exceed the duty paid. Credit was also held not deniable merely because it was taken on the original invoice rather than the duplicate copy prescribed by the notification, since that defect was only procedural and no fraud or inadmissibility was alleged. The order disallowing credit was therefore set aside and relief granted on both grounds.

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Issues: (i) Whether Modvat credit could be denied on a minor shortage of inputs received after duty had been paid on the invoices. (ii) Whether Modvat credit could be denied merely because it was taken on the original invoice instead of the duplicate copy prescribed under the notification.

Issue (i): Whether Modvat credit could be denied on a minor shortage of inputs received after duty had been paid on the invoices.

Analysis: The shortage was treated as minor and attributable to dryage and handling losses. The credit claimed did not exceed the duty shown on the invoices. Since the duty had already been paid and the shortage was only a small transit or handling loss after receipt, denial of credit was not justified.

Conclusion: Modvat credit could not be denied on the ground of the minor shortage.

Issue (ii): Whether Modvat credit could be denied merely because it was taken on the original invoice instead of the duplicate copy prescribed under the notification.

Analysis: The objection was only procedural. No allegation was made that the credit was otherwise inadmissible or that the invoices were fraudulent. The prescribed document requirement was treated as a procedural formality, and credit otherwise due could not be refused merely for using the original invoice.

Conclusion: Modvat credit could not be denied merely because it was taken on the original invoice.

Final Conclusion: The order denying credit was set aside and the assessee was granted the relief claimed in respect of both issues.

Ratio Decidendi: Credit of duty cannot be denied when the substantive entitlement is established and the defect complained of is only a procedural lapse that does not affect the genuineness or admissibility of the credit.

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