Manufacturing company wins Modvat credit dispute over raw materials transfer without endorsement

The appellant, involved in manufacturing polyester yarn, faced a dispute with Revenue over Modvat credit for redirecting duty-paid raw material between their units. Despite invoices being in a different unit's name, the inputs were received and used for manufacturing. Previous tribunal decisions supported the appellant's position that no endorsement was required. As the inputs were used in manufacturing final products, denial of Modvat credit was deemed unjustified. The impugned order was set aside, and the appeal was allowed in favor of the appellant, granting consequential relief.

---

---

Issues involved: Interpretation of Modvat credit u/s CESTAT, AHMEDABAD.

Summary:
The appellant, engaged in manufacturing polyester filament yarn/polyester texturised yarn, received duty paid POY from suppliers for their units in Silvassa. During a specific period, duty paying invoices were issued to Unit 3 but the raw material was intended for use in Unit 2, with Unit 3 redirecting the goods to Unit 2 without physically receiving them. The appellant claimed credit based on these invoices, leading to a dispute with the Revenue regarding endorsement requirements. The appellant argued that all units belonged to the same entity, citing relevant tribunal decisions to support their position.

Upon review, it was established that the inputs were indeed received and utilized by the appellant for manufacturing final products. Although the invoices were in the name of a different unit, the entire consignment was redirected to the appellant's unit where it was received and used. This situation did not constitute a case requiring endorsement of invoices, as clarified by previous tribunal decisions. Given the duty paid nature of the inputs and their proper utilization in manufacturing final products, the Modvat credit denial was deemed unjustified.

Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, providing consequential relief.

---