MODVAT credit denied where destroyed inputs were not proved to have been used in manufacture before the factory fire

MODVAT credit was held inadmissible where the assessee could not prove that inputs were actually consumed in the manufacture process before the factory fire. The adjudicating authority, first appellate authority and Tribunal all found on the record that the claimed work-in-progress and utilisation of inputs were not established, and that the inputs were destroyed without salvage rather than having been used to produce finished goods. The High Court treated the dispute as purely factual, noting that the findings had attained finality and that no question of law arose.

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Issues: Whether MODVAT credit was admissible on inputs said to have been in process of manufacture when the factory was destroyed by fire and no finished product resulted from the subject inputs.

Analysis: The claim turned on whether the inputs had in fact been used in the manufacture process before the fire. The adjudicating authority, the first appellate authority, and the Tribunal all found, on the material placed before them, that the assessee failed to establish that the inputs were consumed in manufacture or that the goods were in a stage of work-in-progress as alleged. The record accepted by the authorities showed destruction of inputs and absence of salvage, and the Tribunal, as the final fact-finding authority, concluded that the inputs in question could not be treated as having been utilised in the manufacture of finished goods. The High Court held that this was purely a factual issue and no question of law arose because the factual findings had attained finality.

Conclusion: MODVAT credit was not admissible, and the appeal failed.

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