Modvat credit on duty-paid glass bottles was allowed despite delivery through endorsed gate passes and non-original packing.

Modvat credit was admissible on glass bottles used by aerated water manufacturers where the bottles were received under duly endorsed gate passes evidencing duty payment. The inputs were initially cleared to a printer shown as consignee, then supplied to the manufacturers after printing under the same original gate passes, and the duty-paid character of the goods was not in dispute. Rule 57G was satisfied because the bottles were received in full against documents showing duty payment, so credit could not be denied merely because they were not received in original packing. Trade notice and Board circular material also supported this interpretation.

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Issues: Whether Modvat credit was admissible on glass bottles received by aerated water manufacturers through endorsed gate passes without receipt in original packing.

Analysis: The statutory requirement under Rule 57G was that inputs must be received under cover of documents evidencing payment of duty. The glass bottles were initially cleared to a printer, who was shown as consignee, and after printing were supplied to the assessees under the same original gate passes duly endorsed in their favour. The bottles were received in full as per the invoices, and the duty-paid character of the inputs was not in dispute. The requirement of receipt of duty-paid inputs was therefore satisfied, and denial of credit solely because the bottles were not received in original packing was not justified. The contemporaneous trade notice and Board circular also supported this view.

Conclusion: Modvat credit on the glass bottles was admissible and the assessees succeeded on this issue.

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