Modvat credit admissible where receipt of invoiced inputs is not disproved and no fraud or suppression is shown.

Modvat credit is admissible where inputs were received and consumed in the factory on invoices issued by a registered dealer, and the Revenue produces no contrary evidence of non-receipt of goods or non-payment against those invoices. The denial of credit on the allegation that non-duty-paid scrap was supplied instead of duty-paid inputs was not sustained because the assessee had received, used and paid for the goods, and the record did not disprove the invoices. The Tribunal also accepted that the ingredients of fraud, wilful misstatement, collusion, suppression, or contravention with intent to evade duty were not established.

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Issues: Whether Modvat credit could be denied where the inputs were received and consumed in the factory on the strength of invoices issued by a registered dealer, and no contrary evidence showed non-receipt of goods or non-payment of the supplier's invoices.

Analysis: The denial of credit was examined on the footing that the dealer had supplied non-duty-paid scrap instead of duty-paid inputs. On the record, the assessee had received and consumed the inputs in the factory and had paid for them, while the Revenue produced no contrary evidence to disprove receipt of goods or payment against the invoices. The issue was treated as covered by earlier Tribunal decisions holding that once receipt of goods under duty-paying invoices is not successfully disputed, credit cannot be denied. The reasoning also accepted that the conditions for invoking recovery on the basis of fraud, wilful misstatement, collusion, suppression, or contravention with intent to evade duty were not established against the assessee.

Conclusion: Modvat credit was held to be admissible and the denial of credit was not sustainable; the issue was decided in favour of the assessee.

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