Modvat credit for railway siding receipts allowed where valid duty documents accompanied inputs and no prescribed procedure was breached.

Modvat credit was admissible where inputs were cleared under valid duty paying documents and received by the manufacturer at a railway siding before being transported to the factory under challans cross-referencing wagon numbers. The absence of unloading facilities at the railway station justified receipt at the siding, and no prescribed procedure was shown to prohibit the onward movement to the factory. A Board circular dealing with transfer from one vehicle to another was held inapplicable to this factual situation. Credit could not therefore be denied on a merely technical objection.

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Issues: Whether Modvat credit was admissible where inputs were cleared under duty paying documents, received at a railway siding, and thereafter transported to the factory under challans bearing cross-reference of wagon numbers.

Analysis: The inputs were cleared by the supplier under duty paying documents contemplated by Rule 57G of the Central Excise Rules and were received by the manufacturer under those documents. The absence of unloading facility at the railway station justified receipt at the siding and onward transport by truck under challans. No prescribed procedure governing such movement from railway siding to factory was shown to displace the duty paying documents already accompanying the goods. The Board circular relied upon dealt with transfer from one vehicle to another and did not govern the factual situation.

Conclusion: Modvat credit could not be denied, and the issue is decided in favour of the assessee.

Ratio Decidendi: Where inputs are received under valid duty paying documents and the subsequent movement from a railway siding to the factory is not shown to violate any applicable prescribed procedure, Modvat credit cannot be refused on a merely technical objection.

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