Modvat credit cannot be denied on private entries alone when statutory records and supporting documents show receipt of inputs.

Modvat credit could not be denied merely because of third-party private jottings, alleged short receipt in informal records, or non-entry in the factory gate register. Where statutory records showed receipt of inputs and supporting invoices, transport documents, bills and challans were available, the private register was not proved to be authored by the assessee or the supplier's responsible person, and no transporter statement or other evidence established non-receipt, non-use or diversion, the gate register was not conclusive proof against credit. On that basis, denial of credit was unjustified and the assessee was entitled to the Modvat credit.

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Issues: Whether denial of Modvat credit was sustainable when it was based on a third party's private register, alleged short receipt reflected in private documents, and non-entry in the factory gate register.

Analysis: The credit was disallowed on the strength of private jottings and gate entries, but the statutory records showed receipt of inputs and the supporting documents such as invoices, transport documents, bills and challans were available. The private register was not shown to have been authored by the assessee or its supplier's responsible person, no transporter's statement was recorded, and the gate register was not a statutory register or conclusive proof of non-receipt. Where the statutory records tally and there is no evidence of non-receipt, non-use, or diversion of inputs, credit cannot be denied merely on the basis of rough or casual third-party entries.

Conclusion: The denial of Modvat credit was not justified and the assessee was entitled to the credit.

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