Modvat credit admissibility confirmed where duty-paid inputs, proper invoices, and account payee payment supported receipt and use in manufacture.

Modvat credit was held admissible where duty-paid inputs were received under proper invoices from a registered dealer, payment was made by account payee cheque, and the inputs were used in manufacture of dutiable final products. An objection based on the supplier's identity, an alleged absence of a godown, or an error in the supplier's name in the notice did not justify denial when the substantive conditions for credit were otherwise satisfied. The record did not provide a reliable basis to disbelieve receipt and use of the inputs, so the credit denial was not justified.

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Issues: Whether Modvat credit could be denied where the inputs were received under proper invoices from a registered dealer, paid for by account payee cheque, and used in manufacture of dutiable goods, notwithstanding an objection regarding the supplier's identity and the alleged absence of a godown.

Analysis: The notice and the record did not establish any reliable basis to disbelieve the receipt of duty-paid inputs under proper invoices issued by a registered dealer. The goods were shown to have been received and used in the manufacture of dutiable final products, and payment was made by account payee cheque. A subsequent departmental enquiry about the supplier's place of business or an error in describing the supplier's name in the notice did not, by itself, justify denial of credit when the substantive conditions for availing credit were satisfied.

Conclusion: Modvat credit was admissible and the denial of credit was not justified.

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