Modvat/Cenvat credit denied for non-receipt of goods and diversion through accommodation invoices

Modvat/Cenvat credit was held inadmissible where the assessee failed to prove actual receipt of the goods in its factory and the evidence indicated diversion through accommodation invoices. The Tribunal noted that statements of vehicle owners and transport evidence showed the goods were not carried to the assessee's premises, and the burden remained on the assessee to establish bona fide receipt before claiming credit. In the absence of such proof, the first appellate authority's view on transportation savings and limitation was found unsustainable. The Revenue's appeal was allowed and the Order-in-Original was restored.

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Issues: Whether Modvat/Cenvat credit was admissible when the assessee failed to establish receipt of the goods in its factory and the evidence showed diversion of the goods through accommodation invoices.

Analysis: The evidence relied upon by the adjudicating authority, including the statements of the vehicle owners and the transporter's evidence, showed that the vehicles mentioned in the documents had not transported the impugned goods to the assessee's factory. On the materials on record, the claim of receipt of goods was not proved, and the burden lay on the assessee to establish bona fide receipt before claiming credit. In the absence of such proof, the first appellate authority's inference regarding transportation savings and limitation was unsustainable. The Tribunal held that the impugned order suffered from legal infirmity because the factual findings established non-receipt of goods and diversion of the transaction.

Conclusion: The Modvat/Cenvat credit was not admissible, and the Revenue's appeal was allowed by restoring the Order-in-Original.

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