Modvat credit on supplementary invoices requires proof of fraud or suppression; absent that proof, denial is unjustified.

Modvat credit on supplementary invoices issued by a job worker could not be denied absent proof that the differential duty arose from fraud, collusion, wilful misstatement or suppression of facts. The Revenue bore the burden of establishing those disqualifying circumstances, and the record showed no deliberate evasion; the job worker had itself detected the short levy and paid the duty with interest. The material also indicated a revenue-neutral situation because the duty paid by the job worker would have been available as credit to the assessee. The credit was therefore admissible, and the disallowance was set aside.

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Issues: Whether Modvat credit could be denied on the basis of supplementary invoices issued by the job worker when there was no finding of fraud, collusion, wilful misstatement or suppression of facts.

Analysis: The authorities below had denied credit under Rule 7(1)(b) of the Cenvat Credit Rules, 2002, but there was no categorical finding that the differential duty became payable on account of fraud, collusion, wilful misstatement or suppression. The job worker had itself detected the short levy, paid the differential duty with interest, and the material on record did not establish any deliberate evasion. The burden to prove the existence of the disqualifying circumstances rested on the Revenue. The facts also indicated a revenue-neutral situation, as the duty paid by the job worker would have been available as credit to the appellant.

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

Final Conclusion: The appeal succeeded and the impugned orders disallowing credit were set aside.

Ratio Decidendi: Supplementary-invoice credit cannot be denied unless the Revenue proves that the differential duty arose from fraud, collusion, wilful misstatement or suppression of facts.

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