Modvat credit on written-off input shortages did not create a referable question of law where facts showed no available inputs for manufacture.

Shortage of inputs written off in the books, where Modvat credit had already been taken and was not reversed, was treated as showing that the inputs were not available for use in manufacturing excisable goods. On those facts, Rule 57-I applied to recover credit wrongly availed or utilised, and the alleged shortage did not by itself establish a contravention of Rule 57F requiring a referable question of law. The fact that the department had taken a different view in later years did not, on its own, create a question of law fit for reference. The request for a reference to the High Court was rejected.

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Issues: Whether apparent shortage of inputs written off in the books, in respect of which Modvat credit had been taken, gave rise to a question of law warranting a reference to the High Court.

Analysis: The petitioner sought a reference on whether shortage of inputs amounted to contravention of Rule 57F and whether duty could be demanded under Rule 57-I. The Court noted that the department had found that credit had not been reversed in respect of inputs declared as shortages and written off for earlier years. On those facts, the Court held that the shortage and write-off showed that the inputs were not available for use in the manufacture of excisable goods and that Rule 57-I was invoked for recovery of credit wrongly availed or utilised. The Court further held that the mere fact that the authorities had taken a different view in subsequent years did not, by itself, create a referable question of law.

Conclusion: No referable question of law arose from the facts found, and the request to direct the Tribunal to draw up a statement of facts and refer the question was rejected.

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