Modvat credit cannot be denied on mere allegation of bogus invoices where payment and transport records support receipt of inputs.

Modvat credit could not be denied merely on an allegation that dealer invoices were issued without corresponding supply of inputs. The Tribunal noted that the appeals against the dealers had already been allowed and that the Revenue's circumstances were insufficient to prove that the goods were not supplied. It also relied on payment by account payee cheques and transport challans carrying endorsements showing receipt of consignments. On these facts, the invoices were treated as proper Modvatable invoices and the denial of credit was rejected.

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Issues: Whether Modvat credit could be denied to the assessee merely on the allegation that the dealer invoices were issued without corresponding supply of inputs.

Analysis: The Tribunal noted that the appeals against the dealers who had issued the invoices had already been allowed, and the circumstances relied upon by the Revenue were held insufficient to establish that the invoices were without supply of inputs. The assessee was treated as a beneficiary of invoices which had been held to be proper Modvatable invoices, and the Commissioner (Appeals) had also relied on payment through account payee cheques and transport challans bearing endorsements indicating receipt of the consignments.

Conclusion: Modvat credit could not be denied on the facts of the case, and the Revenue's appeals were rejected.

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