MODVAT credit cannot be denied for defective transport particulars without corroborative evidence of non-receipt or diversion.

MODVAT credit cannot be denied merely because the transporter was alleged to be non-existent or the vehicle numbers in invoices were incorrect, where statutory records showed receipt and consumption of inputs in manufacture, payment was made through banking channels, and freight vouchers and GRs were produced. In the absence of corroborative evidence of non-receipt or diversion of goods, discrepancies in transport particulars and unsupported allegations were treated as insufficient to displace the credit. The denial of credit was therefore not sustainable.

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Issues: Whether MODVAT credit could be denied merely because the transporter was alleged to be non-existent and the vehicle numbers mentioned in the invoices were found to be incorrect, in the absence of corroborative evidence showing non-receipt or diversion of inputs.

Analysis: The denial of credit was based only on discrepancies in vehicle numbers and the alleged non-existence of the transport company. The inputs were entered in statutory records, consumed in manufacture of final products cleared on payment of duty, and the consideration was paid through banking channels. Freight payment vouchers and GRs were also produced. No material showed that the goods were diverted to any other unit, and the allegation rested on conjectures and surmises rather than evidence. In such circumstances, wrong vehicle numbers alone could not justify denial of credit.

Conclusion: The denial of MODVAT credit was not sustainable and the issue was decided in favour of the assessee.

Ratio Decidendi: MODVAT credit cannot be denied solely on the basis of defective transport particulars when receipt and use of inputs are supported by records and the Revenue lacks corroborative evidence of non-receipt or diversion.

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