Modvat credit depends on actual receipt of duty-paid inputs and genuine invoices; unsupported reversal was set aside for fresh review.

Modvat credit is unavailable where duty-paid inputs were not actually received and the supporting invoices were found to be invalid on admissions and documentary evidence. The Commissioner had relied on statements, transport records, octroi material and surrounding evidence to conclude that the goods never reached the assessee's premises, but the Tribunal reversed that finding without properly addressing the material on record. The appellate order was therefore set aside and the dispute remanded for fresh adjudication on entitlement to credit on the existing admissions and evidence.

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Issues: Whether Modvat credit could be sustained on the strength of invoices when the Commissioner had found, on admissions and documentary evidence, that the goods were not actually received by the assessees and the invoices were invalid.

Analysis: The record showed that the Commissioner had relied on statements of concerned persons, transport records, octroi material, and other surrounding evidence to conclude that the inputs did not physically reach the assessees' premises and that the invoices were not genuine for the purpose of Modvat credit. The Tribunal reversed that finding without adequately dealing with those admissions and supporting materials. Since credit under the Modvat scheme is available only when duty-paid inputs are actually received and supported by proper invoices, the Tribunal's view was held to be unsupported and perverse on the material before it.

Conclusion: The Tribunal's order could not be sustained; the matter was required to be reconsidered afresh on the existing admissions and evidence, and the revenue's challenge succeeded.

Final Conclusion: The appellate order was set aside and the dispute was sent back for fresh adjudication on the Modvat-credit entitlement.

Ratio Decidendi: Modvat credit cannot be allowed unless duty-paid inputs are actually received and the finding on entitlement must be based on relevant evidence, admissions, and genuine invoices.

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