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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether deemed Modvat credit was admissible on steel sheets/coils where the purchase documents did not mention thickness, but the assessee produced other evidence to show that the inputs were sheets of thickness not exceeding 5 mm.
Analysis: The relevant Government order restricted the benefit to steel sheets of thickness not exceeding 5 mm, but the underlying object of the deeming provision in Rule 57G(2) was to extend credit where strict documentary linkage was difficult. The absence of thickness particulars in the bills and challans did not, by itself, defeat the claim if the assessee could establish the nature of the inputs by other reliable material. The Board's clarification describing sheets as products below 5 mm thickness, together with expert opinion, industry specifications and the descriptions in the supply documents, supported a presumption that the inputs were sheets within the prescribed thickness. That presumption was rebuttable, but the Department did not displace it.
Conclusion: Deemed Modvat credit was admissible, and the disallowance of credit was unsustainable.
Ratio Decidendi: Where a deeming credit provision is intended to relieve documentary difficulty, eligibility may be proved by cogent secondary evidence of the character of the inputs, and a mere omission of thickness particulars in invoices does not bar credit if the prescribed condition is otherwise established.
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