Modvat credit on input receipt and use upheld where documentary evidence supported the Tribunal's factual findings

The Punjab & Haryana HC noted that Modvat credit cannot be denied where contemporaneous records, declarations, blend registers, factory verification and test reports supported receipt and use of inputs in manufacture. The Tribunal had evaluated the evidence and found that the Revenue's reliance on buyer statements and other contrary material did not disprove receipt or use beyond doubt. The court treated the challenge as factual, not involving perversity or a substantial question of law, because the Tribunal's findings were evidence-based rather than conjectural. The assessee was therefore entitled to Modvat credit and the Revenue's appeal failed.

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Issues: Whether the denial of Modvat credit on the alleged non-receipt and non-use of inputs was justified and whether the Tribunal's findings were perverse so as to give rise to a substantial question of law.

Analysis: The record showed contemporaneous documentary support for receipt and use of polyester filament yarn in manufacture, including register entries, declarations, blend records, and departmental verification at the factory. Test reports also supported the assessee's case. The Tribunal had assessed the evidence and found that statements of buyers and the material relied upon by the Revenue did not establish, beyond doubt, that the inputs were not received or used. The High Court held that the Revenue's challenge was essentially factual and that the Tribunal's conclusions were based on evidence, not on conjecture or perversity.

Conclusion: The assessee was entitled to Modvat credit and the Revenue's appeal failed for want of any substantial question of law.

Ratio Decidendi: Where the Tribunal's finding on receipt and use of inputs is supported by documentary evidence, such finding cannot be treated as perverse merely because the Revenue relies on statements or other contrary material; no substantial question of law arises in a pure finding of fact.

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