Per Shri V.P. Gulati :

The issue in the appeal relates to grant of MODVAT Credit in respect of goods which were covered by invoice which had been endorsed once. The period involved is 5.4.94 to 12.4.94. The learned lower appellate authority has followed the decision of the Hon'ble Bombay High Court in the case of Bombay Goods Transport Vs. Union of India reported in 1995 (77) ELT 521 (Bom). That was a case where the assessee had lost the gate pass and it was in those circumstance the Hon'ble Bombay High Court in their extra ordinary jurisdiction gave a direction to the department to allow the MODVAT Credit subject to verification regarding duty paying nature of the goods. The Hon'ble High Court in that case however, upheld the power of the Government to prescribe certain documents which may be treated as valid documents for MODVAT purposes. In our view the ratio of that decision would not be directly applicable to the facts of this case.

2. Shri S. Murugandi, the learned SDR for the department has pleaded that with effect from 1.4.94 'there was change of rule in regard to documentation and invoice has been prescribed as duty paying document and this position has been brought about by amendment to Rule 52A of the Central Excise Rules. He has pleaded that at the relevant time in terms of Rule 57G the Government of India did not prescribe invoice which had been endorsed once as prescribed document under which the goods for MODVAT purpose could be received. He has pleaded that in this background, therefore, MODVAT Credit could not have been allowed.

3. Shri KR Natarajan, learned Counsel for the respondents has pleaded that at the relevant time there was lot of confusion as to the documentation and the Government itself came forward on the representation made by the assessees with a number of relaxation and gate pass for the limited period upto 30.6.94 was allowed to be treated as valid document for MODVAT purpose. He has pleaded that gate pass even if endorsed once prior to 1.4.94 were valid documents and this position stood clarified by Notification 16/94 dated 30.3.94. He has pleaded that invoice was substitute document for gate pass and the same consideration regarding endorsement should be applied for the purpose.

4. We have considered the pleas made by both the sides. There is force in the plea of the respondents. At the relevant time there was lot of confusion and the Government of India in this background had relaxed the position regarding documentation and allowed even gate passes which have been issued prior to 1.4.94 to be accepted for MODVAT purposes. Therefore, gate pass which had been endorsed once before in terms of Notification 16/94 were acceptable for MODVAT purposes. Since invoice was substitute document there was no reason why similar consideration should not apply in the case of invoice. We have in a number of cases in similar circumstances held that in view of the relaxation given, invoice which had been endorsed once, should be accepted like endorsed gate pass till 30.6.94 the period upto which endorsed gate pass was notified as valid document for MODVAT purpose. In this view of the matter we hold that the assessees are entitled to Modvat Credit subject to verification regarding duty paying nature of the goods and subject to other conditions as mentioned in the impugned order. The appeal is therefore dismissed with the above observations.