Modvat credit on duty-paid bottles cannot be denied merely because goods were not received in original packing.

Modvat credit under Rule 57G could not be denied merely because duty-paid glass bottles were not received in their original packing after printing, decoration and repacking by an intermediary. The endorsed gate pass remained a valid duty-paid document where the goods were identifiable and duty payment was undisputed. The requirement of receipt in original packing was treated as relevant, at most, to a second endorsement and not to a first endorsement in favour of the assessee. As the bottles were co-relatable to the endorsed gate passes and had passed through only one intermediary, denial of credit solely for lack of original packing was unwarranted.

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Issues: Whether Modvat credit could be denied on duty-paid glass bottles received under a gate pass endorsed once, merely because the bottles were not received in their original packing after printing, decoration and repacking by an intermediary.

Analysis: Rule 57G of the Central Excise Rules, 1944 requires receipt of inputs under a prescribed duty-paid document. The Board's instructions permitting endorsement of gate passes were relied on to show that such documents remain valid where the goods are identifiable and duty payment is not in dispute. The condition of receipt in original packing was held to be relevant, at the highest, to a second endorsement and not to a first endorsement in favour of the assessee. Since the duty-paid bottles were co-relatable to the endorsed gate passes and had passed through only one intermediary, denial of credit solely for want of original packing was held to be unwarranted.

Conclusion: Modvat credit could not be denied on the ground that the duty-paid glass bottles were not received in original packing, where the goods were received under a gate pass endorsed once and were identifiable with the relevant duty-paid documents.

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