Fraudulent Modvat credit without input receipt justified equal penalty on remand under the statutory scheme.

Fraudulent availment of Modvat credit without receipt of inputs was treated as established, and the demand and fraud finding had not been challenged further. On remand, no fresh material was produced to justify any different view, so the statutory consequence for such irregular credit applied. Penalty equal to the disallowed credit was therefore upheld as the proper levy in the remand proceedings.

---

---

Issues: Whether, on remand, penalty was required to be levied equal to the amount of Modvat credit irregularly taken.

Analysis: The credit had been taken without receipt of the inputs, and the finding of fraudulent availment of Modvat credit stood confirmed. The demand and the finding on fraud had not been challenged further, and no fresh material was produced in the remand proceedings to justify a different view. In view of the earlier High Court direction and the statutory requirement governing such cases, penalty equal to the amount of credit disallowed had to be imposed.

Conclusion: Penalty equal to Rs. 15,38,296 was rightly leviable and was confirmed.

---