Modvat credit on endorsed challans required full evidence review; denial was set aside and remanded for fresh adjudication.

Denial of Modvat credit on goods received under endorsed challans could not be sustained on the basis of a company representative's statement and the supplier's letter alone, where challans, an affidavit and other documentary evidence were not properly considered. The record indicated that the inputs were claimed to be defective blooms and billets usable in the furnace, and the evidence required fresh appraisal on the full record. The impugned order was set aside and the matter remanded for de novo adjudication after hearing the appellants.

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Issues: Whether denial of Modvat credit on goods received under endorsed challans could be sustained on the basis of the statement of the company representative and the supplier's letter, without considering the challans, affidavit and other documentary evidence.

Analysis: The lower authorities proceeded mainly on the alleged admission and on the supplier's letter, but did not record a finding on the objection relating to Modvat credit on endorsed challans. The statement relied upon was not treated as conclusive when read with the challans and the affidavit filed by the Director, which supported the case that the inputs received were defective blooms and billets capable of being used in the furnace. The evidence was not properly appreciated and the matter required fresh examination on the entire record.

Conclusion: The denial of credit and the consequential demand were not upheld at this stage, and the matter was remanded for de novo adjudication after considering the appellants' evidence.

Final Conclusion: The impugned order was set aside and the dispute was sent back for fresh decision on merits after hearing the appellants.

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