Modvat credit on endorsed bill of entry allowed where goods moved within the same company to its manufacturing unit.

Modvat credit could not be denied where the bill of entry was endorsed by the head office to its own manufacturing division, because the division was not a separate legal entity and the consignment was received in the factory in original packed condition. The applicable Board circular allowed credit when the bill of entry stood in the name of the registered or head office and was endorsed for delivery to the manufacturing unit, and those conditions were met. The Larger Bench ruling on endorsements between independent manufacturers was held inapplicable. Credit was therefore admissible and the Revenue's objection failed.

---

---

Issues: Whether Modvat credit could be denied merely because the bill of entry was endorsed by the head office to one of its own divisions, where the consignment was received in the factory in original packed condition.

Analysis: The division was part of the same company and not an independent legal entity. The Board circular permitted credit where the bill of entry stood in the name of the registered office or head office, the entire consignment was received in the factory in original packed condition, and the bill of entry was endorsed for delivery to the manufacturing unit. Those conditions were satisfied. The Larger Bench decision dealing with endorsement between independent manufacturers and endorsement of invoices was held to be inapplicable on the facts.

Conclusion: Modvat credit was admissible and the Revenue's objection to the endorsed bill of entry failed.

Ratio Decidendi: Credit cannot be denied where an endorsed bill of entry is transferred within the same company to its own manufacturing unit and the governing circular conditions for receipt and endorsement of the consignment are satisfied.

---