Substantial compliance under MODVAT rules upheld where endorsed gate passes and original packing supported credit entitlement.

MODVAT credit was treated as admissible where gate passes were endorsed by an authorised agent of the consignor, because the consignments were diverted to the recipient with the consignor's agreement, reached the factory in original packing, and had not been received or credited by the original consignee. The endorsement defect was regarded as procedural only, and Rule 57G was held to have been substantially complied with. On that basis, the credit claim was accepted and the Revenue's objection was rejected.

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Issues: Whether MODVAT credit was admissible on gate passes endorsed by an authorised agent of the consignor, and whether the requirements of Rule 57G stood substantially complied with.

Analysis: The consignments were diverted to the respondents with the consignor's agreement, the goods reached the respondents' factory in original packing, and the evidence showed that the original consignee had not received the consignments and had not claimed MODVAT credit on them. On these facts, the procedural endorsement defect did not defeat the substantive entitlement, and the requirements of Rule 57G were treated as having been substantially complied with.

Conclusion: MODVAT credit was admissible to the respondents on the concerned gate passes, and the Revenue's objection was rejected.

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