Endorsed manufacturer's invoice supports Modvat credit in transit sale when duty-paid inputs are ultimately received and used.

An endorsed manufacturer's invoice used in a transit sale can satisfy the documentary requirement for Modvat credit under Rule 57G if it continues to evidence payment of duty on the inputs and the inputs are ultimately received and used by the claimant. The fact that the intermediary purchaser did not physically receive the goods before endorsement did not, by itself, defeat credit where the statutory declaration requirement was met. On those facts, the invoice remained valid evidence for credit and no substantial question of law arose for reference.

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Issues: Whether Modvat credit could be availed on the strength of an endorsed manufacturer's invoice in a transit sale, and whether any substantial question of law arose from the Tribunal's order.

Analysis: The inputs were transferred in transit by the first purchaser through endorsement of the manufacturer's invoice, which continued to evidence payment of duty on the inputs. Rule 57G required receipt of duty-paid inputs under prescribed documents evidencing duty payment, and the endorsement did not destroy the character of the invoice as such evidence. The fact that the intermediary purchaser did not physically receive the goods before endorsing the invoice did not, by itself, defeat Modvat credit where the duty-paid inputs were ultimately used by the assessee and the statutory declaration requirement was satisfied.

Conclusion: The endorsed invoice was a valid basis for Modvat credit on the facts of the case, and no substantial question of law arose for reference; the reference application failed.

Final Conclusion: The judgment confirms that a transit transfer by endorsement of the manufacturer's invoice does not, by itself, disqualify Modvat credit when the invoice evidences duty payment and the inputs are received and used in the assessee's factory.

Ratio Decidendi: In a transit sale, an endorsed manufacturer's invoice can satisfy the documentary requirement for Modvat credit under Rule 57G if it evidences duty payment on the inputs and the inputs are ultimately received and used by the claimant.

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