Modvat credit on transitional invoices upheld where supporting records matched earlier gate passes and technical objection failed.

Modvat credit on duty-paid inputs could not be denied on a purely technical objection where the inputs were received in December 1994, the invoice correlated with the earlier gate pass particulars, and contemporaneous supporting material was available. The transitional circular under Rule 57H accepted invoice or document as a valid basis for credit and directed acceptance up to 31.12.1994, so the Revenue's insistence that the invoice must have been produced earlier was unwarranted. The departmental orders and communications rejecting credit were therefore not sustainable, and the petitioners were entitled to Modvat credit.

---

---

Issues: Whether the petitioners were entitled to Modvat credit on the strength of gate passes issued before 1.4.1994 and the later invoice/document, despite the departmental view that credit could be taken only up to 30.6.1994.

Analysis: The applicable Modvat regime under Rule 57G permitted credit on duty-paid inputs, and the documentary requirement changed from gate pass to invoice from 1.4.1994. The subsequent Board circular issued in the context of transitional difficulties under Rule 57H prescribed invoice/document as a valid basis for credit and directed acceptance up to 31.12.1994. The record showed that the inputs had been received in December 1994, the petitioners had contemporaneous supporting material, and the invoice correlated with the gate pass particulars. The Revenue's refusal rested only on a technical objection that the invoice was not produced before 31.12.1994, which was held to be unwarranted in the light of the circular and the surrounding facts.

Conclusion: The petitioners were entitled to Modvat credit, and the departmental orders and communications denying the credit were not sustainable.

---