Modvat credit cannot be denied for a mere endorsement defect when the transaction is genuine and records are otherwise consistent.

Modvat credit could not be denied merely because the endorsed ex-bond bill of entry and gate pass were not formally endorsed in favour of the assessee, where the goods and issuing company were otherwise identifiable and no discrepancy existed in receipt or records. The Tribunal treated the missing endorsement as a procedural defect and held that a technical lapse in duty-paying documents cannot defeat substantive credit entitlement when the transaction is genuine and the record support is otherwise complete. Credit was therefore admissible and the Revenue challenge failed.

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Issues: Whether Modvat credit could be denied merely because the endorsed ex-bond bill of entry and the gate pass were not formally endorsed in favour of the assessee, despite the documents relating to the same company and there being no other discrepancy in the goods or records.

Analysis: The Tribunal noted that the only defect in the documents was the absence of endorsement in favour of the assessee's unit, while the goods and the issuing company were otherwise identifiable and no discrepancy was shown in the receipt of goods. In such circumstances, the defect was treated as a procedural discrepancy. The Tribunal held that a mere technical lapse in the duty-paying documents cannot defeat the substantive entitlement to Modvat credit when the transaction is otherwise genuine and supported by the records.

Conclusion: Modvat credit was admissible and the Revenue appeal failed.

Final Conclusion: The order allowing credit was upheld because a formal defect in endorsement, without any substantive dispute about the goods or documents, was insufficient to deny credit.

Ratio Decidendi: Procedural defects in duty-paying documents do not justify denial of Modvat credit where the transaction is otherwise genuine and the substantive conditions for credit are satisfied.

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