Deemed Modvat credit on rerollable iron and steel cannot be denied without proof that inputs were non-rerollable.

Deemed Modvat credit could not be denied merely on a bare assertion that the inputs were not rerollable and were usable only for forging. The record showed that the material was procured from the market and rerolled after heating, and there was no proof that it was incapable of rerolling. In view of the existing order allowing credit on rerollable iron and steel purchased from outside even without documentary proof of duty payment, the refusal of credit was unjustified. The assessee was therefore entitled to the deemed Modvat credit.

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Issues: Whether deemed Modvat credit could be denied on the ground that the inputs were not rerollable material and were usable only for forging.

Analysis: The denial of credit rested on a bare conclusion that the goods could not be rolled, but no basis was indicated for that finding. The record also showed that the material was procured from the market and rerolled after heating. In the absence of proof that the inputs were not rerollable material, and in view of the order permitting credit on rerollable iron and steel purchased from outside without documentary evidence of duty payment, the credit could not be refused.

Conclusion: The denial of deemed Modvat credit was unjustified and the assessee was entitled to the credit.

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