Modvat credit on disputed invoice particulars requires verification and fresh adjudication before denial.

Modvat credit could not be finally denied where the duty-paid character of the inputs was not in dispute and the objection centred on invoice particulars requiring verification. The Tribunal held that the proper course was to complete scrutiny of the documents, afford the assessee a hearing, and obtain a reasoned decision after examining the departmental objections. The impugned order was set aside and the matter remanded for fresh consideration, leaving entitlement to credit to be determined again after verification.

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Issues: Whether Modvat credit could be denied on the basis of invoices issued by depot suppliers when the duty-paid character of the inputs was not in dispute and the invoice particulars required further verification.

Analysis: The input caprolactum was not disputed to be eligible for Modvat credit, and the controversy centred on the validity and completeness of the invoices used for availment of credit. The record indicated that the departmental objections were capable of verification, and the Tribunal had already directed scrutiny of the documents and a report on the relevant particulars. In these circumstances, a final denial of credit without completing the verification exercise was not warranted. The proper course was to afford hearing to the assessee and require the Commissioner to examine the documents and pass a reasoned order after verification of the objections.

Conclusion: The issue was decided in favour of the assessee to the extent that the impugned order was set aside and the matter was remanded for fresh consideration and verification of the documents.

Final Conclusion: The appeal succeeded by way of remand, leaving the question of Modvat credit to be decided afresh by the Commissioner after verification and hearing.

Ratio Decidendi: Where entitlement to Modvat credit turns on invoice particulars and the duty-paid nature of inputs is not genuinely disputed, the matter should not be denied finally without proper verification and fresh adjudication.

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