Modvat credit cannot be denied for non-endorsement after vehicle change when duty-paid inputs were received and used in manufacture.

Modvat credit cannot be denied solely because the invoice was not re-endorsed after transfer of inputs from one vehicle to another, where the duty-paid character of the goods, their receipt in the factory, and their use in manufacture are admitted. The governing principle is that substantive compliance with the Modvat scheme prevails over a venial procedural lapse, so a technical defect in endorsement does not defeat credit in the absence of any allegation that the goods were not received or were misused.

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Issues: Whether Modvat credit could be denied merely because the invoice was not re-endorsed with the new vehicle number when the inputs were transferred from one vehicle to another, despite admitted duty-paid character of the inputs, their receipt in the factory, and their use in manufacture.

Analysis: The duty-paid nature of the inputs was not in dispute, nor was their receipt in the factory or their use in the final product. The only objection was non-endorsement of the invoice after transshipment, as contemplated by the trade notice and the Modvat procedure. The governing principle applied was that where the substantive requirements of the Modvat scheme are satisfied, a merely procedural or technical lapse does not justify denial of credit. The order also relied on prior tribunal decisions holding that non-reendorsement of the vehicle number, in the absence of any allegation that the goods did not reach the factory or were misused, is not a serious infraction warranting denial of credit.

Conclusion: Modvat credit could not be denied on the sole ground of non-endorsement of the invoice after change of vehicle, and the Revenue's challenge failed.

Ratio Decidendi: Substantive entitlement to Modvat credit cannot be defeated by a venial procedural lapse when duty-paid inputs are admittedly received and used in the factory.

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