Modvat credit cannot be denied for multiple endorsements when duty-paid inputs are otherwise established and defects are only procedural.

Modvat credit could not be denied merely because the duty-paying document carried more than one endorsement where the inputs were otherwise shown to be duty paid and received as a full consignment. Rule 57G and the Board's circulars were read as relaxing strict documentary formalities to give effective benefit of Modvat credit, and later clarification stated that credit should not be refused on procedural grounds alone. The earlier view in S.B.S. Organics was affirmed, while Premier Induction was treated as fact-specific and not inconsistent. Credit was therefore allowable, and the reference and appeal were decided in favour of the assessee.

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Issues: Whether Modvat credit could be denied merely because the duty-paying document had been endorsed more than once, and whether credit could be allowed where the goods were duty paid and the objection was only procedural.

Analysis: Rule 57G of the Central Excise Rules, 1944 and the Board's circulars showed a consistent relaxation of formal documentary requirements in order to implement Modvat credit effectively. The Tribunal noted that the earlier and later circulars, together with the notification introducing endorsed gate passes as specified documents, reflected that the real test was whether the inputs had suffered duty and were received in full consignment. The later Board clarification directed that credit should not be denied on procedural grounds alone and that pending cases were to be decided accordingly. The earlier Tribunal view in S.B.S. Organics was affirmed, and the later decision in Premier Induction was treated as fact-specific and not in conflict.

Conclusion: Credit could not be refused solely because the document had been endorsed twice. The assessee was entitled to Modvat credit since the consignments were duty paid and the objection was only procedural.

Final Conclusion: The reference was answered in favour of the assessee, and the appeal was allowed with consequential relief.

Ratio Decidendi: Modvat credit cannot be denied merely for multiple endorsements on the duty-paying document when the duty-paid character of the goods is established and the objection is only procedural.

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