Modvat credit cannot be denied for technical defects in gate pass endorsements where inputs were received and used in manufacture.

Modvat credit could not be denied merely because gate passes were not properly endorsed or the endorsements were irregular, as the defects were treated as remediable and the substantive receipt and use of inputs in the factory was the material consideration. The appellants were required to rectify the documentation and produce supplier certificates showing non-availment of Modvat credit, after which the Assistant Collector was to reconsider the claim and verify receipt and use of the inputs.

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Issues: Whether Modvat credit could be denied solely because the gate passes were not properly endorsed or were endorsed in an irregular form, and whether such defects were remediable.

Analysis: The credit was denied on the basis of defects in the gate passes and the form of endorsement. The defective endorsements were treated as remediable, and the appellants undertook to rectify them and produce supplier certificates showing non-availment of Modvat credit. The substantive receipt and use of inputs in the factory was treated as the material consideration, and the technical objection was held not to defeat the credit claim.

Conclusion: Modvat credit could not be denied merely on the technical defects pointed out, and the matter was remanded to the Assistant Collector for reconsideration after rectification of the defects and verification of receipt and use of inputs.

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