Modvat credit denied where fake transport particulars and missing receipt evidence showed only paper transactions, with penalties upheld.

Modvat credit was denied because actual receipt of inputs was not proved. The invoices carried false transport particulars, including vehicle numbers inconsistent with the alleged steel consignments, and the record showed no stock entry, no proper entry in the statutory register, and admissions that the goods were not reflected as received. On this evidence, the transactions were treated as paper transactions involving fictitious movement rather than real supply, so the invoices could not support credit. The penalties were also upheld as justified.

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Issues: Whether modvat credit was admissible when the invoices and transport particulars were shown to be fake and the goods were found not to have been physically received.

Analysis: The evidence showed that the dealer had issued invoices with false vehicle registration particulars, including numbers belonging to mopeds and scooters incapable of carrying the alleged steel consignments. The record also showed absence of stock, non-entry in the statutory register, and admissions by the concerned person that the invoices were signed by him and that no proper receipt of goods was reflected. On this material, the transactions were held to be only paper transactions and not actual movement and receipt of goods. Since actual receipt of inputs was not established, the credit taken on the strength of such invoices was not admissible.

Conclusion: Modvat credit was correctly denied and the penalties were justified.

Ratio Decidendi: Credit under the modvat scheme is not admissible unless actual receipt of inputs is proved, and invoices supported by false transport particulars and other evidence of fictitious movement cannot confer credit.

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