Modvat credit denial remanded after additional evidence undermined the factual basis and penalty was reopened for reconsideration.

Additional evidence showed that the importing unit had not availed credit and had not claimed drawback or refund of countervailing duty, so the factual basis for denying Modvat credit on the four Bills of Entry was not finally established. The denial was therefore set aside and the matter was remanded for fresh examination by the Commissioner (Appeals), with penalty also left for reconsideration after hearing the parties.

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Issues: Whether denial of Modvat credit on the 4 Bills of Entry was sustainable, and whether the penalty required reconsideration.

Analysis: The appellants produced subsequent evidence showing that the importing unit had not availed credit and that no drawback or refund of countervailing duty had been claimed. This evidence was not before the Commissioner (Appeals). In these circumstances, the factual foundation for denying credit was not finally established, and the matter required fresh examination after considering the additional material and granting hearing.

Conclusion: The denial of credit was set aside and the issue was remanded to the Commissioner (Appeals) for fresh decision, along with reconsideration of penalty.

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