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Issues: (i) Whether Modvat credit was inadmissible on the ground that the inputs were not received under the disputed invoices; (ii) whether the demand was barred by limitation in view of the returns and records filed by the assessee.
Issue (i): Whether Modvat credit was inadmissible on the ground that the inputs were not received under the disputed invoices.
Analysis: The denial of credit was based on the circumstance that one vehicle allegedly used for transport was registered for agricultural work, but no finding was recorded on whether that vehicle could in fact transport the inputs. There was also no finding regarding the other vehicles said to have carried the goods. Against this, the assessee produced weighbridge slips, consignment notes and other supporting records. No contrary evidence, such as statements from transporters or the weighbridge owner, was brought by the revenue to disprove receipt of inputs.
Conclusion: The inputs were held to have been received in the factory and the demand on merits was held unsustainable, in favour of the assessee.
Issue (ii): Whether the demand was barred by limitation in view of the returns and records filed by the assessee.
Analysis: The assessee had filed RT 12 returns and accompanying records, and the authorities had ample opportunity to examine consumption of inputs and manufacture of final products at the relevant stage. Having failed to detect the alleged non-receipt at that stage, the revenue could not subsequently invoke suppression, misstatement or fraud to justify the extended period.
Conclusion: The demand was held to be barred by limitation, in favour of the assessee.
Final Conclusion: The impugned order was set aside because the duty demand failed both on merits and on limitation, and the assessee succeeded while the revenue's appeal failed.
Ratio Decidendi: Mere suspicion arising from the registration particulars of a vehicle is insufficient to disallow credit when the assessee produces affirmative documentary evidence of receipt of inputs and the revenue adduces no rebuttal; where statutory records were filed and no timely verification was undertaken, extended limitation cannot be sustained on allegations of suppression alone.
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