Wrongful Modvat/Cenvat credit claims based on non-receipt of goods can justify interest and penalty where evasion intent is found.

Wrongful Modvat/Cenvat credit based on claimed receipt and transport of goods was treated as unsustainable where the factual finding showed the goods had not been received or moved through the vehicles asserted by the assessee. On that basis, the ingredient of intent to evade duty was considered established, and the consequential recovery of credit, interest and penalty under the excise provisions was upheld. The commentary states that an unimpeached factual finding of non-receipt or non-transport is sufficient to sustain denial of credit and the associated fiscal consequences.

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Issues: Whether the disallowance of Modvat/Cenvat credit and the consequential levy of interest and penalty were sustainable in view of the finding that the goods had not been received or transported as claimed, and whether the element of intent to evade duty stood established.

Analysis: The adjudicating authority recorded that the assessee had claimed credit without receiving the relevant goods. The appellate authority had taken a contrary view, but the Tribunal restored the adjudication order after finding that the goods were not transported through the vehicles claimed by the assessee. That factual finding was held to be unimpeached. On that basis, the statutory ingredient of intent to evade duty was treated as satisfied, and the consequential recovery of credit, interest and penalty under the relevant excise provisions was upheld.

Conclusion: The challenge to the denial of Modvat/Cenvat credit and the consequential interest and penalty failed, and the findings were sustained against the assessee.

Ratio Decidendi: Where a factual finding establishes non-receipt or non-transport of goods supporting a wrongful credit claim, the ingredient of intent to evade duty is satisfied and the consequential levy of interest and penalty is maintainable.

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