Modvat credit on depot invoices was upheld where a clarificatory circular validated documents for the relevant period.

Modvat credit could not be denied on invoices issued by a manufacturer's depot for the period 1-4-1994 to 11-5-1994, because the Board's clarificatory circular treated such invoices as valid duty-paying documents under the revised Modvat documentation regime. Notification No. 21/94 was read as curing the lacuna in Notification No. 15/94, and invoices covered by that clarification, if containing the prescribed particulars, were eligible for credit. The denial of Modvat credit was therefore unsustainable and was set aside.

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Issues: Whether Modvat credit could be denied on invoices issued by the manufacturer's depot during the period 1-4-1994 to 11-5-1994 on the ground that such invoices were not valid duty-paying documents under Rule 57G.

Analysis: The dispute was resolved by the Board's clarificatory Circular No. 204/38/96-CX dated 26-4-1996, issued under Rule 57H of the Central Excise Rules. The circular explained that Notification No. 21/94 cured the lacuna in the earlier Notification No. 15/94 and recognised invoices issued against gate passes for the relevant period, including invoices issued by a manufacturer from its depot, as valid documents for availing Modvat credit. The invoices in question fell within that period and also contained the particulars prescribed under Notification No. 15/94.

Conclusion: The denial of Modvat credit was unsustainable and the credit was admissible.

Final Conclusion: The impugned denial of credit was set aside and the appellant succeeded in obtaining the Modvat benefit.

Ratio Decidendi: A clarificatory circular issued to remove a lacuna in the Modvat documentation regime governs invoices issued within the covered period, and credit cannot be denied where the invoices are recognised by that clarification as valid duty-paying documents.

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