Modvat credit allowed where documents proved returned goods were the same steel wire rods sent out for reconditioning.

Modvat credit could not be denied merely because goods returned after reconditioning were not immediately identifiable, where the records showed original clearance of steel wire rods, their return after rejection, reversal of credit, and the receipt back of the same goods. The endorsement and accompanying documents sufficiently linked the goods sent out for reconditioning with the goods received earlier, and that correlation was accepted as proved. As duty had already been paid on the goods received back, the ground for disallowing credit failed. The denial of Modvat credit was therefore unjustified, and the assessees were entitled to the credit.

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Issues: Whether Modvat credit could be denied on the ground that the goods returned after reconditioning could not be correlated with the goods earlier cleared, and whether the assessees had established that the same goods had come back after reversal of credit.

Analysis: The relevant documents showed the original clearance of steel wire rods, their return after rejection and reversal of credit, and the subsequent receipt back of the same goods. The Tribunal found that the endorsement and accompanying documents sufficiently established the linkage between the goods sent out for reconditioning and the goods received earlier. Since duty had already been paid on the goods received back and the correlation stood proved, the basis for disallowing credit failed.

Conclusion: The denial of Modvat credit was unjustified and the assessees were entitled to take the credit.

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