MODVAT credit cannot be denied for curable document defects when inputs are received and used in manufacture.

MODVAT credit under Rule 57G(2) was treated as a substantive entitlement not defeated by defective or improperly endorsed duty-paying documents accompanying the inputs. The procedural requirement of producing such documents was held to be evidentiary rather than mandatory at the point of receipt, and later rectification of endorsement defects was considered permissible where the inputs were actually received and used in manufacture. On that basis, procedural technicalities were not allowed to deny credit, and no referable question of law was found for High Court consideration.

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Issues: Whether MODVAT credit could be denied merely because the duty-paying documents accompanying the inputs were defective or not properly endorsed at the time of receipt, and whether such defects could be rectified later so as to sustain a reference to the High Court.

Analysis: Rule 57G(2) of the Central Excise Rules, 1944 requires receipt of inputs under cover of duty-paying documents, but the wording does not mandate that the documents must invariably accompany the inputs at the moment of receipt. The procedural production of documents serves only to substantiate the substantive entitlement to MODVAT credit. Where the inputs are actually received and used in manufacture, later rectification of endorsement defects is permissible, and procedural technicalities should not defeat the credit. In the absence of any real alternate interpretation, no referable question of law arises from the order.

Conclusion: The defect in the duty-paying documents was treated as rectifiable, and the request to refer the question to the High Court was not entertained.

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