Exemption denial for duty-paid inputs was unsustainable where Modvat credit records already showed the relevant particulars.

Denial of concessional duty under Notification No. 14/92-C.E. was held unsustainable where the assessee had taken Modvat credit on inputs and the record itself showed the duty-paid particulars of the raw materials. On those facts, the conclusion that duty-paid character of inputs had not been proved was not supported by the material on record, and the adjudicating authority was found to have ignored relevant facts. The exemption benefit could not therefore be denied, and the demand raised on that basis could not stand.

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Issues: Whether the denial of concessional duty benefit under Notification No. 14/92-C.E. was sustainable when the record showed that the assessee had availed Modvat credit on inputs and duty-paid particulars were available.

Analysis: The record showed that the assessee was availing Modvat credit on the inputs used in manufacture, indicating that particulars of the inputs and the duty paid thereon were available. In that situation, the conclusion that the assessee had not proved the duty-paid character of the raw materials was unsupported by the material on record. The order proceeded without proper regard to the existing facts and reflected non-application of mind.

Conclusion: The denial of the exemption benefit was unsustainable and the demand based on that denial could not stand.

Ratio Decidendi: An exemption denial is unsustainable where the available record itself establishes the relevant duty-paid input particulars and the adjudicating authority ignores those material facts.

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