Modvat credit on invoiced inputs cannot be denied merely for supplier non-deposit of duty; unresolved balance remanded.

Modvat credit could not be denied merely because the supplier had not deposited excise duty, where the assessee received invoices and paid the invoice value; the Court treated duty payment by the supplier as presumable unless the contrary was shown, and held that the buyer need not verify the supplier's departmental records. On that basis, the assessee's credit claim on the invoiced inputs was upheld. As to the remaining disputed credit, the Tribunal had given no meaningful finding, so that part of the dispute was remanded for fresh consideration after hearing both sides.

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Issues: (i) whether Modvat credit could be denied merely because the supplier had not actually deposited excise duty on the inputs, despite the assessee having received invoices and made payment; (ii) whether the remaining disputed credit, said to be not pressed or voluntarily reversed, required fresh consideration by the Tribunal.

Issue (i): whether Modvat credit could be denied merely because the supplier had not actually deposited excise duty on the inputs, despite the assessee having received invoices and made payment.

Analysis: Rule 57G was relied upon to contend that credit was available only on duty-paid inputs. The Court held that, where the buyer receives invoices for excisable goods and pays the invoice value, it is reasonable to presume, unless the contrary is established, that duty has been or will be paid by the supplier. The buyer cannot be expected to verify the supplier's accounts or independently confirm payment with the excise department.

Conclusion: The assessee was entitled to Modvat credit on the strength of the invoices, and the Tribunal's view in favour of the assessee was not interfered with on this point.

Issue (ii): whether the remaining disputed credit, said to be not pressed or voluntarily reversed, required fresh consideration by the Tribunal.

Analysis: The Tribunal's order contained no meaningful discussion of the remaining controversy. In the absence of findings on that part of the dispute, the matter required reconsideration after hearing both sides.

Conclusion: That portion of the order was set aside and the matter was remanded to the Tribunal for decision on the remaining issues.

Final Conclusion: The assessee succeeded on the main Modvat-credit issue, while the unresolved balance of the dispute was sent back for fresh adjudication.

Ratio Decidendi: A purchaser of excisable inputs who receives invoices and pays the invoice value is entitled to presume that duty has been or will be paid by the supplier, and Modvat credit cannot be denied merely on the ground of the supplier's non-deposit unless the contrary is established.

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