Modvat credit on original invoices required proof of loss and prior permission; later relaxation operated prospectively only.

Modvat credit on original invoices was not admissible where the prescribed transporter's or duplicate copy was lost but the loss was not promptly intimated, not satisfactorily proved, and permission under Rule 57G(2A) was not obtained. The later insertion of Rule 57G(2A) by Notification No. 23/94-C.E. (N.T.) created a new discretionary power for the Assistant Commissioner to allow credit on original invoices upon proof of loss, so it was prospective and could not validate credit already taken for an earlier period. The disallowance of credit was therefore justified.

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Issues: Whether Modvat credit could be availed on original invoices where the transporter's copy or duplicate invoice was lost, and whether Rule 57G(2A) inserted by Notification No. 23/94-C.E. (N.T.) operated retrospectively so as to validate credit already taken.

Analysis: Modvat credit under the then existing scheme was admissible only on the prescribed invoice copy. The appellants had not promptly intimated the loss of the transporter's copy, had not satisfactorily proved such loss to the competent authority, and in most cases had not even sought permission under Rule 57G(2A). The sub-rule was introduced for the first time by Notification No. 23/94-C.E. (N.T.) and conferred a new power on the Assistant Commissioner to allow credit on original invoices upon satisfaction about loss of the duplicate copy. It was therefore not merely clarificatory and could not be treated as retrospectively validating credit taken on invoices relating to a period prior to its insertion.

Conclusion: The claim for Modvat credit on original invoices was not sustainable and the disallowance was justified.

Final Conclusion: The appeal failed on merits because the statutory relaxation for credit on original invoices was prospective and the requisite proof and permission were absent.

Ratio Decidendi: A provision introducing a new discretionary power to allow credit on original invoices upon proof of loss of the duplicate copy is prospective unless the text or context clearly makes it retrospective, and credit cannot be allowed without proof of loss and compliance with the prescribed procedure.

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