Credit on non-receipt of inputs denied; penalty upheld, while redemption fine and interest failed for want of applicability.

Credit under the excise input scheme cannot be sustained without proof of actual receipt of inputs; where the record showed that the goods covered by the documents were not received, the credit was rightly denied. Once the availment of credit was found unauthorized, the penalty for ineligible credit was confirmed. Confiscation with redemption fine was not upheld on the facts stated, and the interest demand was also unsustainable because the relevant interest provision was introduced after the period in dispute. The appeal succeeded only to the limited extent of setting aside the redemption fine and interest.

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Issues: (i) Whether the credit taken on the basis of the documents could be sustained when the goods were found not to have been received; (ii) whether the penalty imposed for availing ineligible credit was sustainable; (iii) whether confiscation with redemption fine and the interest demand could be upheld.

Issue (i): Whether the credit taken on the basis of the documents could be sustained when the goods were found not to have been received.

Analysis: The record was found sufficient to show that the goods covered by the documents were not actually received by the appellant. As the receipt of inputs itself was not established, the credit availed could not be supported under the credit scheme.

Conclusion: The credit was not admissible and was rightly denied.

Issue (ii): Whether the penalty imposed for availing ineligible credit was sustainable.

Analysis: Once the availment of credit was found to be unauthorized because the inputs were not received, the corresponding penal consequence followed. No basis was accepted for interfering with the quantified penalty.

Conclusion: The penalty was confirmed.

Issue (iii): Whether confiscation with redemption fine and the interest demand could be upheld.

Analysis: Since no inputs were received, confiscation under the cited penalty provision was held not to be attracted on the facts stated. The interest demand was also found unsustainable because the relevant interest provision was introduced later than the period in dispute.

Conclusion: The redemption fine and interest were set aside.

Final Conclusion: The appeal succeeded only to the limited extent of setting aside the redemption fine and interest, while the denial of credit and the penalty were sustained.

Ratio Decidendi: Credit under the excise input scheme cannot be upheld without proof of actual receipt of inputs, and consequential penalty may follow, but confiscation and interest cannot be sustained unless the governing provision is applicable to the relevant period and facts.

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