Modvat credit on dummy invoices was denied where identical serial numbers and unproven duty-paid goods undermined the claim.

Modvat credit was claimed on invoices later found to be dummy documents carrying identical serial numbers. The credit failed because the supplier's depot admitted issuing fraudulent invoices, a penalty had been imposed on the depot, and the duty-paid nature of the goods covered by the disputed invoices was not established. Even though credit had been allowed on one invoice, the remaining invoices bearing the same number could not independently support credit without proof that they related to duty-paid goods. The disputed credit was therefore not admissible and the denial of Modvat credit was upheld.

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Issues: Whether Modvat credit could be allowed on invoices found to be dummy invoices with identical serial numbers when the duty-paid nature of the goods was not established.

Analysis: The invoices relied upon for credit bore identical serial numbers and were found to have been issued fraudulently. The supplier's depot had itself admitted issuing dummy invoices, and a penalty had been imposed on it. Credit had already been allowed on one invoice, but the remaining invoices of the same number could not support credit unless the duty-paid nature of the goods covered by those documents was clearly established. As that factual foundation was not proved, the claim to credit failed.

Conclusion: Modvat credit was not admissible to the appellant on the disputed invoices and the denial of credit was upheld.

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