Modvat credit on invoice duty upheld despite minor short receipt of inputs; reversal demand held unsustainable.

Modvat credit was treated as allowable on the duty shown in suppliers' invoices even where a lesser quantity of inputs was received, provided the shortage was insignificant. Applying that settled principle, the demand for reversal of credit for meagre short receipt of inputs could not be sustained, because the invoice duty basis remained sufficient for credit and the minor shortage did not justify denial of the benefit. The issue was resolved in favour of the assessee, and reversal of credit was held not demandable.

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Issues: Whether Modvat credit could be availed for the full duty shown in suppliers' invoices despite receipt of lesser quantity of inputs, and whether reversal of credit was demandable for the short receipt when the shortage was meagre.

Analysis: The settled position applied was that credit is allowable on the basis of the duty reflected in the invoice even if the quantity actually received is short, where the shortage is insignificant. On that footing, the demand for reversal of credit on account of the short receipt of inputs could not be sustained.

Conclusion: The issue was decided in favour of the assessee and the demand of reversal of credit was held not sustainable.

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