Modvat credit denial upheld where invoices and supplier records showed no actual receipt of inputs.

Modvat credit was denied because the assessee failed to establish actual receipt of inputs in the factory: invoices did not match the claimed supply of MS scrap, the supplier's records and admissions indicated invoices had been issued without clearance of goods, and the vehicle details were inconsistent with transportation of scrap. The challenge based on denial of cross-examination failed because that procedural objection did not cause prejudice where the adverse finding rested on independent documentary evidence. The order therefore sustained denial of Modvat credit.

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Issues: Whether Modvat credit could be denied where the inputs were found not to have been received in the factory, and whether reliance on witness statements without cross-examination vitiated the order.

Analysis: The documentary material showed that the invoices relied upon by the assessee did not correspond with actual supply of MS scrap, and the supplier's records and admissions indicated that invoices alone had been issued without clearance of goods. The vehicle particulars in the invoices were also inconsistent with transportation of scrap. On this evidence, the assessee failed to establish receipt of inputs in its factory. In such circumstances, the denial of cross-examination did not cause prejudice sufficient to displace the finding based on independent documentary evidence.

Conclusion: The denial of Modvat credit was upheld and the assessee's challenge on cross-examination failed.

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