Modvat credit cannot be denied where reverse-side gate pass entries are only distribution records and not multiple endorsements.

Modvat credit cannot be denied merely because a gate pass bears prior writings on its reverse side if those entries only record distribution of part quantities through subsidiary gate passes. Such reverse-side writings do not amount to endorsements to multiple persons. Where the remaining quantity was sold to the recipient and the gate pass was endorsed in its favour instead of issuing a subsidiary gate pass, the document remained acceptable for Modvat purposes. The denial of credit was therefore unjustified and the recipient was entitled to the credit.

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Issues: Whether Modvat credit could be denied on the ground that the gate pass carried prior writings at the back and was treated as having been endorsed multiple times, rendering it an improper document for availing credit.

Analysis: The credit was denied by treating the gate pass as having been endorsed repeatedly, but the writings at the back were found to be mere records showing distribution of part quantities of the goods through subsidiary gate passes. The back-side writings were not treated as endorsements to different persons. Since the remaining quantity was sold to the respondent and the gate pass was endorsed in its favour instead of issuing a subsidiary gate pass, the document was held to be acceptable for Modvat purposes.

Conclusion: The denial of Modvat credit was unjustified and the respondent was entitled to the credit.

Ratio Decidendi: Writings made on the reverse of a gate pass as a record of distribution of goods do not amount to endorsements to multiple persons, and such a document cannot be rejected as an improper Modvat document when the factual transfer in favour of the recipient is established.

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