Modvat credit entitlement turns on statutory proof of receipt and use, not on prior physical verification or trade notice restrictions.

Modvat credit could not be denied merely because the goods were not physically verified before consumption where the claim was supported by original invoices, a transporter's affidavit and the consignor's forwarding letter. The governing rule did not require prior physical verification as a precondition; entitlement had to be determined by verifying receipt of the goods and their use in manufacture on the basis of records and evidence. A trade notice could not impose an enforceable procedural condition beyond the rules, so rejection on that basis was not justified. The matter was remitted for fresh determination after such verification.

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Issues: (i) Whether Modvat credit could be denied merely because the goods covered by the invoices were not physically verified before consumption; (ii) whether the restriction said to arise from the trade notice was enforceable in the facts of the case.

Issue (i): Whether Modvat credit could be denied merely because the goods covered by the invoices were not physically verified before consumption.

Analysis: The request for credit was founded on original invoices after the duplicate copy was lost in transit, supported by the transporter's affidavit and the consignor's forwarding letter. The governing rule did not prescribe prior physical verification of the goods as a condition precedent for availing credit in such circumstances. The matter required verification of receipt of the goods and their use in manufacture on the basis of the relevant records and evidence.

Conclusion: Denial of credit solely on the ground of absence of prior physical verification was not justified.

Issue (ii): Whether the restriction said to arise from the trade notice was enforceable in the facts of the case.

Analysis: Even if the trade notice contemplated such verification, a procedural requirement of that nature could not override the applicable rules. The proper course was to examine the statutory documents and other evidence and then decide entitlement to credit by a reasoned order.

Conclusion: The trade notice condition was not enforceable as a ground to reject the claim.

Final Conclusion: The matter was sent back for fresh determination after verification of receipt and use of the goods, with an opportunity to the assessee to establish entitlement to Modvat credit.

Ratio Decidendi: A trade notice cannot impose an enforceable precondition that is not found in the governing rules, and entitlement to Modvat credit must be decided on verification of the statutory requirements and evidence of receipt and use of the goods.

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