Modvat credit and raw material shortages: duty demand fails where no credit was taken on the short-found material.

Duty demand on raw material shortages was held unsustainable where Modvat credit had not been availed on those materials. The analysis turned on the absence of any credit claim against the short-found raw material: a mere shortage by itself did not establish a recoverable duty liability on that material. The demand was therefore set aside on the stated facts.

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Issues: Whether duty could be demanded on raw material found short when Modvat credit had not been taken on such material.

Analysis: The duty demand related to raw material shortages. The adjudicating authority had confirmed duty on the short-found raw material, while the appellant contended that no Modvat credit had been availed on that material and therefore no duty was payable on it. On the facts, the material shortage by itself did not justify a duty demand on the raw material in the absence of Modvat credit being taken.

Conclusion: The duty demand on the raw material was not sustainable and was set aside.

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