Modvat credit requires valid transfer documents and Rule 57F compliance when goods move to another unit after receipt.

Modvat credit on excisable goods was treated as dependent on compliance with the prescribed transfer procedure and valid documentation. An invoice issued under Rule 57A ceased to serve as the required document after the goods reached the intended unit, and any subsequent movement to another unit had to follow Rule 57F through a fresh and valid document. The requirement was considered substantive because it protected revenue and enabled verification of duty-paid character. In the absence of a fresh invoice and compliance with the prescribed procedure, credit on an endorsed invoice basis was not admissible.

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Issues: Whether Modvat credit could be allowed on goods transferred under an endorsed invoice after receipt at one unit, without issuing a fresh invoice or following the prescribed Rule 57F procedure.

Analysis: The original invoice issued under Rule 57A ceased to be a valid document after the goods reached the unit for which it was prepared. If the goods were subsequently required in another unit, the transfer had to be made under the procedure prescribed by Rule 57F, which contemplated movement under a fresh and valid document. The requirement was treated as substantive, intended to protect revenue and to enable verification of the duty-paying nature of the goods. Since no fresh invoice was issued and the prescribed procedure was not followed, the benefit could not be sustained merely on the ground that the goods had a duty-paid character and the assessee had followed the practice earlier.

Conclusion: Modvat credit was not admissible on the endorsed invoice basis, and the rejection of the credit was upheld in favour of the Revenue.

Ratio Decidendi: Movement of excisable goods for Modvat purposes must be supported by valid documents and compliance with the prescribed transfer procedure, and such compliance is a substantive condition for availing credit.

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