Modvat credit cannot be denied on an ? unclear notice; exact allegations in the show cause notice are essential.

Modvat credit could not be denied where the assessee used its own gate pass as the credit document, since the return of the final product as input was covered by the Larger Bench ruling relied on in the proceedings. The demand also failed because the show cause notice did not clearly and specifically allege any documentation deficiency; a notice must state the exact charge, and an ambiguous allegation cannot later be expanded by inference to sustain an adverse order. The denial of credit was therefore held unsustainable and relief was granted.

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Issues: Whether Modvat credit could be denied on the ground that the assessee used its own gate pass as the credit document and whether the demand could be sustained when the show cause notice did not clearly allege deficiency in documentation.

Analysis: The return of the final product as input was covered by the Larger Bench ruling relied upon in the proceedings. The objection based on documentation was not specifically and clearly set out in the show cause notice. A notice meant to inform the assessee of the charge must state the exact allegation, and an ambiguous notice cannot be supplemented by an inference later drawn to support the adverse order.

Conclusion: The denial of Modvat credit was not sustainable, and the appeal succeeded.

Final Conclusion: The assessee was held entitled to relief, and the impugned order was set aside.

Ratio Decidendi: A demand cannot be upheld on a ground not clearly and specifically stated in the show cause notice, and ambiguous notice language cannot be used to sustain a denial of credit.

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