Modvat credit on stock in hand allowed despite later production of supporting gate pass under Rule 57H.

Modvat credit under Rule 57H was held admissible on input stock lying with the assessee where the department had been informed in advance and physical availability of the goods was not disputed. The initial absence of part of the supporting gate pass did not defeat credit, because the remaining documentation was produced later and the rule was treated as requiring permission for credit on stock in hand rather than immediate possession of every document. The assessee was therefore entitled to credit on the entire quantity, and the Revenue's challenge failed.

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Issues: Whether Modvat credit could be allowed under Rule 57H on 20 MT of PVC resin lying in stock when part of the supporting gate pass was initially unavailable but the department had been informed and the document was produced later.

Analysis: The respondents had notified the department that the input stock was lying in their factory and had sought permission to avail credit under Rule 57H. The record showed that 10 MT of the resin was supported by GP-1 and the remaining quantity was later covered by production of the gate pass. The Assistant Collector did not dispute the physical availability of the input stock before the relevant date, and Rule 57H was treated as requiring permission for credit on stock lying with the assessee rather than insisting on immediate possession of every document at the initial stage.

Conclusion: The assessee was eligible for Modvat credit on the entire quantity of 20 MT of PVC resin, and the Revenue's challenge failed.

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