Modvat credit on high sea sale goods upheld where duly endorsed Bills of Entry proved duty payment and receipt of goods.

Modvat credit was treated as admissible for goods acquired on High Sea Sale basis where the Bills of Entry were duly endorsed in favour of the purchaser. The assessed Bill of Entry was accepted as proof of duty payment, and receipt of the goods in original packed condition directly from the Customs House to the factory was considered sufficient support for credit eligibility. The settled practice and prior Tribunal orders on the same point reinforced this approach, and the denial of credit was set aside.

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Issues: Whether Modvat credit was admissible on goods purchased on High Sea Sale basis against duly endorsed Bills of Entry.

Analysis: The assessed Bill of Entry was treated as proof of payment of duty for the goods covered by it. The endorsed Bills of Entry in favour of the purchaser, together with the receipts of the goods in original packed condition directly from the Customs House to the factory, were accepted as sufficient for availing Modvat credit. The settled practice and prior Tribunal orders on the same point supported this view.

Conclusion: Modvat credit was held admissible on the basis of duly endorsed Bills of Entry in a High Sea Sale transaction, and the denial of credit was set aside.

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