Marginal short receipt of inputs does not warrant Modvat credit reversal when natural causes remain plausible and evidence is unchallenged.

Marginal short receipt of inputs did not justify reversal of Modvat credit where the Revenue did not controvert the factual finding of only a minor deficiency. The record also did not establish any error in the supplier's weighment or dip measurement, and there was no basis to exclude natural causes as an explanation for the shortage. On that footing, the demand for reversal of credit and the connected penalties were not sustained.

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Issues: Whether Modvat credit was liable to reversal on account of marginal short receipt of inputs and whether the penalties imposed were sustainable.

Analysis: The short receipt was found to be marginal and this factual position was not controverted by the Revenue. The record did not show that the weighment at the supplier's end or the dip measurement was incorrect, and there was no basis to hold that the short receipt could not be attributed to natural causes.

Conclusion: The order setting aside the demand for reversal of Modvat credit and the penalties was upheld.

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