Modvat credit on endorsed gate pass required proof of factory receipt and input use before denial could stand.

Modvat credit depended on whether the original duly endorsed gate pass was produced and whether the inputs were actually received in the factory and consumed. An endorsement in favour of the assessee's head office, rather than the factory, did not by itself justify denial of credit without verifying those factual requirements. The impugned order was therefore set aside and the matter remanded for fresh adjudication after examination of the relevant facts and grant of personal hearing.

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Issues: Whether Modvat credit was admissible where the gate pass was endorsed in favour of the assessee's registered office instead of the factory, and whether the matter required re-examination of the factual basis for availment of credit.

Analysis: The gate pass was endorsed in favour of the assessee's head office at Kanpur, while the factory was situated at Fatehpur. The key factual question was whether the original duly endorsed gate pass had been produced and whether the goods had in fact been received in the factory and consumed as inputs. On that basis, the objection to credit could not be sustained without verifying these facts.

Conclusion: The impugned order was set aside and the matter was remanded for fresh adjudication after verifying the relevant facts and granting personal hearing to the assessee.

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