Change in identity of goods defeats Modvat credit when Rule 57F(2) permission for conversion was not obtained.

Modvat credit was unavailable where endorsed gate passes covered copper tubes, but the goods ultimately received were copper pipes and scrap after conversion by an intermediary. The change in identity of the goods meant the original documents did not support the credit claim, and the failure to obtain permission under Rule 57F(2) for the conversion and movement was a substantive defect. Objections based on cross-examination or the wording of the notice did not cure that defect. Credit was therefore inadmissible.

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Issues: Whether Modvat credit could be taken on endorsed gate passes when the goods received had undergone a change in identity and the procedure under Rule 57F(2) was not followed.

Analysis: The goods covered by the original gate passes were copper tubes, whereas the goods ultimately received were copper pipes along with scrap after conversion by an intermediary. The identity of the goods had changed, and the appellant had not obtained permission under Rule 57F(2) of the Central Excise Rules, 1944 for such conversion and movement. In these circumstances, the endorsed gate passes could not support a valid claim of credit, and objections relating to cross-examination or the wording of the notice did not affect the substantive defect in the claim.

Conclusion: Modvat credit was not admissible and the appeal failed.

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