Modvat credit denied where duty payment on inputs was not proved and deemed credit was unavailable.

Modvat credit on scrap inputs was disallowed because the sale documents did not specify the duty amount or rate, and there was no reliable evidence establishing actual duty payment on the inputs. The assessee relied on a public sector supplier's description of the goods as duty paid and on the lowest assumed rate, but that was insufficient to prove entitlement to credit. The relevant order also did not provide for deemed credit on the item concerned. In these circumstances, the credit claim could not be sustained and the disallowance was upheld.

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Issues: Whether Modvat credit could be availed on scrap inputs when the documents did not show the amount of duty paid and there was no provision for deemed credit under the applicable order.

Analysis: The inputs were purchased from a public sector supplier whose sale documents described the goods as duty paid, but the documents did not specify the duty amount or rate. The assessee itself proceeded on the basis of the lowest rate of duty. The record also showed that there was no provision for allowing deemed credit for the relevant item under Order No. 342/1/88-TRU dated 20-5-88. In the absence of reliable documentary evidence establishing payment of duty on the inputs, the claimed credit could not be sustained.

Conclusion: The Modvat credit was not allowable and the finding disallowing the credit was upheld.

Final Conclusion: The appeal failed as the claim for credit was unsupported by proof of duty payment and no deemed credit benefit was available.

Ratio Decidendi: Credit cannot be allowed where payment of duty on inputs is not established by evidence and the governing scheme does not provide deemed credit.

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