Modvat credit on duty-paid inputs cannot be denied where authorised subsidiary certificates substitute for a GP.1 document.

Modvat credit could not be denied merely because inter-unit removal of duty-paid inputs was supported by subsidiary gate passes or Superintendent-issued certificates instead of a GP.1 document. The inputs had been removed after reversal of earlier credit and payment of duty, and their duty-paid character was not in dispute. Rule 57F(1)(ii) did not require exclusive use of a GP.1, and the prescribed documents under Rule 57G included endorsed gate passes, subsidiary gate passes and subsidiary certificates issued by the Range Superintendent. Credit was therefore admissible on the strength of those authorised documents, and denial solely for non-use of GP.1 was unsustainable.

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Issues: Whether Modvat credit could be denied when inputs removed from one unit to another were accompanied by subsidiary gate passes or certificates issued by the Superintendent, instead of a GP.1 document, and whether such documents were valid for availing credit.

Analysis: The input goods were admittedly removed from the first unit after reversal of the Modvat credit and payment of duty, and the Superintendent's certificates reflected that position. The credit at the receiving unit was taken on the strength of those certificates and the duty-paid character of the goods was not in dispute. Rule 57F(1)(ii) did not prescribe that removal could be effected only under a GP.1, and the prescribed documentary forms under the instructions issued under Rule 57G included endorsed gate passes, subsidiary gate passes and subsidiary certificates issued by the Range Superintendent. A narrow construction excluding such documents was therefore not justified.

Conclusion: The Modvat credit was validly available on the basis of the subsidiary certificates and related documents, and denial of credit on the sole ground that a GP.1 was not used was unsustainable.

Ratio Decidendi: Where duty-paid inputs are supported by prescribed subsidiary certificates or equivalent authorised documents, Modvat credit cannot be denied by insisting on a GP.1 unless the rule expressly makes that form mandatory.

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