Modvat credit on duty-paid inputs cannot be denied to the buyer merely because supplier documents were alleged to be tampered with.

Modvat credit could not be denied to a recipient who received the duty-paid inputs reflected in the endorsed gate passes and took credit only for that quantity, even though the supplier was alleged to have tampered with the documents by altering decimal points. The Tribunal treated the actual receipt and duty-paid nature of the goods as ative, and held that any clandestine clearance or misuse of the gate pass by the supplier would call for action against the supplier, not denial of credit to the buyer. On those facts, the Revenue's appeal failed.

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Issues: Whether Modvat credit could be denied to the assessee merely because the gate passes were alleged to have been tampered with, when the assessee had received only the quantity reflected in the documents and had availed credit only to that extent.

Analysis: The demand rested on the allegation that the supplier had altered the quantity in the endorsed gate passes by manipulating decimal points. The Tribunal noted that the adjudicating authority had found no dispute that the respondent actually received the quantity reflected in the gate passes and took credit only to that extent. It was also accepted that the quantity so received was duty paid. If the supplier had clandestinely cleared more goods or misused the same gate pass, any action lay against the supplier. On these facts, denial of Modvat credit to the recipient was not justified.

Conclusion: Modvat credit could not be denied to the assessee, and the Revenue's appeal was rejected.

Ratio Decidendi: Modvat credit cannot be denied to a recipient who has received duty-paid inputs and availed credit only on the quantity actually received, even if the supplier's documents are alleged to have been manipulated.

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