Duty paying certificates from a Public Sector Undertaking can support Modvat credit when Board clarification recognises them as valid documents.

Certificates issued by a Public Sector Undertaking could be accepted as duty paying documents for Modvat credit where the Board's clarification treated such certificates, including those from canalising agencies, as sufficient evidence of duty payment under the proviso to Rule 57G(2) of the Central Excise Rules, 1944. As the record did not show that the clarification was inapplicable or that the supplier was not a Public Sector Undertaking, refusal of credit merely because the documents were not conventional gate passes was unjustified. The denial of Modvat credit was therefore unsustainable.

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Issues: Whether certificates issued by a Public Sector Undertaking could be accepted as duty paying documents for availing Modvat credit under Rule 57G(2) of the Central Excise Rules, 1944.

Analysis: The proviso to Rule 57G(2) permits credit where inputs are received under the cover of prescribed documents or any other document prescribed by the Central Board of Excise and Customs evidencing payment of duty. The Board's letter clarified that certificates issued by Public Sector Undertakings and canalising agencies may be treated as duty paying documents for the purpose of availing credit. The record did not show that the clarification was inapplicable or that the supplier was not a Public Sector Undertaking. In these circumstances, the authorities were not justified in refusing credit merely because the certificates were issued by HCL instead of a conventional gate pass or similar document.

Conclusion: The certificates were admissible as duty paying documents and the denial of Modvat credit was unsustainable.

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