Endorsed Bill of Entry validity for Modvat credit upheld for inter-unit transfer within a multi-unit manufacturer.

Modvat credit could not be denied where imported inputs were covered by a Bill of Entry initially issued in the name of one unit of a multi-unit manufacturer and then endorsed for another unit of the same manufacturer. The Board's circulars and trade notice permitted inter-unit transfer of imported inputs and allowed the endorsement procedure to be followed mutatis mutandis in such cases. Because the goods were transferred within the same manufacturer's units and the receiving unit used the endorsed document, the endorsed Bill of Entry was treated as valid for Modvat purposes.

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Issues: Whether Modvat credit could be denied on the strength of a Bill of Entry issued in the name of one manufacturing unit and endorsed for use by another unit of the same multi-unit manufacturer.

Analysis: The dispute turned on the effect of the Board's circulars and trade notice permitting transfer of imported inputs from one unit to another in a multi-unit setup. The Board had clarified that where inputs are imported in the name of the manufacturer and are transferred to a sister unit, the procedure prescribed for endorsement in the case of the Registered Office/Head Office may be followed mutatis mutandis. The record showed that the goods were transferred within the same manufacturer's units and the endorsed document was used by the receiving unit. In view of the Board's clarification, there was no basis to treat the endorsed Bill of Entry as invalid for Modvat purposes.

Conclusion: Modvat credit could not be denied merely because the Bill of Entry was initially in the name of another unit of the same manufacturer and was endorsed for the receiving unit.

Ratio Decidendi: In a multi-unit manufacturer's case, endorsed duty-paying documents may be accepted for Modvat credit when the Board's circulars permit inter-unit transfer of imported inputs and the goods are received by the credit-taking unit.

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