Burden of proof on wrongful Modvat credit claims: customs demand fails without evidence of inadmissible availment.

A customs demand based on alleged wrongful availment of Modvat credit on imported inputs failed because the Revenue did not prove that such credit had in fact been taken. The assessee consistently maintained that credit was claimed only on indigenous raw materials, and the Department produced no material before the Tribunal or in appeal to rebut that position. On that factual foundation, the demand had no evidentiary support and could not be sustained, and the Tribunal was justified in setting aside the adjudication order.

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Issues: Whether the customs demand raised on the footing that the assessee had availed Modvat credit on imported inputs could be sustained in the absence of proof, and whether the Tribunal was justified in setting aside the adjudication order.

Analysis: The assessee maintained consistently that Modvat credit had not been taken on imported inputs and had been availed only on indigenous raw materials. The Department was unable to verify or produce material to rebut this position before the Tribunal or in the appeal. In such circumstances, the Revenue failed to discharge the burden of proving that the assessee had availed inadmissible credit. Without proof of such availment, the foundation of the demand collapsed.

Conclusion: The demand could not be sustained, and the Tribunal's order setting aside the adjudication was /justified. The appeal was against the assessee.

Ratio Decidendi: Where a duty demand is premised on alleged wrongful availment of credit, the Revenue must prove the factual basis for the allegation; in the absence of such proof, the demand is unsustainable.

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