Modvat credit for job workers upheld in principle where invoices and endorsed Bills of Entry substantially satisfied documentary requirements

Modvat credit for job workers should not be denied merely because the documents do not follow a disputed endorsement format, where the invoices name both the principal manufacturer and the job worker and the Bills of Entry are endorsed by Customs. The documentary record substantially satisfied the relevant Board circular governing such arrangements, so the earlier circular used to refuse credit was inapplicable. Credit was therefore not rejected in principle, though the matter was remitted to the jurisdictional officer for scrutiny of the documents and verification of compliance.

---

---

Issues: Whether Modvat credit could be denied to job workers on the ground of defects in the documents where the invoices named both the principal manufacturers and the job workers, and the Bills of Entry contained endorsement by the Customs authorities.

Analysis: The invoices for imported and locally received inputs showed the names of both the buyers and the job workers, bringing the case within the relevant Board circular dealing with such documentary arrangements. The Bills of Entry were endorsed at the time of import by the Customs authorities indicating that the principal manufacturers had declared the job workers as the persons who would avail the Modvat credit. In these circumstances, the earlier circular relied upon to deny credit was held inapplicable, and the claim to credit could not be rejected merely for want of the disputed endorsement format.

Conclusion: Denial of Modvat credit was not sustainable on the facts disclosed, and the matter was remitted to the Jurisdictional Officer for scrutiny of the documents and verification of compliance.

Final Conclusion: The appeal succeeded to the extent that the assessee's entitlement to credit was recognised in principle, but the matter was sent back for factual verification by the proper officer.

Ratio Decidendi: Modvat credit cannot be denied where the documentary record, including Bills of Entry endorsed by the Customs authorities and invoices naming both the principal and the job worker, substantially satisfies the prescribed requirements.

---