Modvat credit on endorsed invoices was impermissible once Rule 57G required prescribed duty-paying documents.

After the amendment to Rule 57G of the Central Excise Rules, 1944, Modvat credit was required to rest only on the prescribed duty-paying documents. Invoices had to satisfy the statutory conditions under the notifications issued under Rule 57G, and endorsement of invoices by the consignee was no longer permitted as a valid basis for credit. Applying the larger Bench ruling in Balmer Lawrie & Co. Ltd., the Gujarat HC treated the prescribed documentary requirements as mandatory and held that credit could not be taken on endorsed invoices. Modvat credit on such invoices was therefore not admissible, and the Tribunal's contrary view was rejected.

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Issues: Whether Modvat credit could be availed on the strength of invoices endorsed by the consignee after the amendment to Rule 57G of the Central Excise Rules, 1944.

Analysis: The amended credit scheme required credit to be supported only by the prescribed duty-paying documents. After the notifications issued under Rule 57G, invoices had to conform to the statutory conditions and the endorsement of invoices by the consignee was no longer contemplated. The larger Bench decision in Balmer Lawrie & Co. Ltd. was applied to hold that the prescribed requirements were mandatory and that credit could not be taken on endorsed invoices.

Conclusion: Modvat credit on endorsed invoices was not admissible. The Tribunal erred in allowing the appeal, and the question was answered in favour of the Revenue.

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