Modvat credit on PSU certificates remains valid where Board clarification treats them as duty-paying documents.

Rule 57G vested in the Central Board of Excise and Customs the power to specify documents treated as duty-paying documents, so a Collectorate trade notice could not displace that authority without proof of Board backing. The Board's clarification had already accepted certificates issued by Public Sector Undertakings and canalising agencies as duty-paying documents, and the inputs were procured from Public Sector Undertakings. On that basis, Modvat credit on the strength of such certificates was valid in law and the departmental denial was unsustainable.

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Issues: Whether Modvat credit could be denied on inputs supported by certificates issued by Public Sector Undertakings, and whether the trade notice relied upon by the department could override the Central Board of Excise and Customs' power to specify acceptable duty-paying documents.

Analysis: Under Rule 57G, the power to specify documents treated as duty-paying documents lay with the Central Board of Excise and Customs. The departmental reliance on a trade notice issued by the Collectorate was not supported by any material showing that it was issued under the authority of the Board. The Board's earlier clarification treated certificates issued by Public Sector Undertakings and canalising agencies as duty-paying documents, and the inputs in question had been procured from Public Sector Undertakings. The cited Tribunal decision supporting acceptance of such certificates was also followed.

Conclusion: The denial of Modvat credit was unsustainable, and the credit taken on the strength of certificates issued by the Public Sector Undertakings was held to be valid in law.

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