Modvat credit denied where gate pass did not match inputs, and penalty sustained for unsubstantiated credit claim.

Modvat credit was available only where inputs were received in the factory under proper duty-paying documents, and the claimed document had to relate to the very goods in stock. The gate pass relied on did not match the marks and numbers on the bags, so it failed to prove receipt of the disputed consignment. Credit was therefore disallowed. The penalty under Rule 173Q was also sustained because the credit claim was not properly substantiated on the record.

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Issues: Whether Modvat credit was admissible on inputs when the gate pass produced did not correspond to the inputs in stock, and whether the penalty sustained was justified.

Analysis: Credit under Rule 57G was available only when the inputs were received in the factory under proper duty-paying documents. The record showed that the marks and numbers on the bags did not match the gate pass relied upon by the appellants, so the documents did not establish receipt of the very consignment for which credit was claimed. Once the duty-paying document was found not to pertain to the disputed inputs, the challenge to disallowance of credit failed. The penalty sustained under Rule 173Q was also supported by the finding that the credit claim was not properly substantiated.

Conclusion: Modvat credit was rightly disallowed and the penalty was not interfered with.

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