Modvat credit on fake invoices was rejected, with penalty upheld for using fabricated documents.

Modvat credit was denied where invoices used to support the claim were found to be fake, not issued by the stated consignor, and bearing non-genuine signatures. The plea that only the date on otherwise genuine invoices had been altered was rejected because the invoices themselves were held not genuine. Taking credit on fabricated documents was treated as a serious breach of the Modvat scheme, so the credit demand and penalty were upheld.

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Issues: Whether Modvat credit and the consequential penalty were sustainable when the credit was taken on invoices found to be fake and not issued by the stated consignor.

Analysis: The credit was claimed on invoices said to have been issued by the Chandigarh depot of the supplier, but the records and statement of the supplier's official showed that the invoices were not issued by that office and that the signatures were not genuine. The plea that only the date on otherwise genuine invoices had been altered was rejected on the finding that the invoices themselves were not genuine. Taking credit on fabricated documents was treated as a serious breach of the Modvat scheme and did not justify a lenient approach.

Conclusion: The credit demand and penalty were upheld and the appeal failed.

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