Cenvat credit on inputs upheld where documentary records proved receipt and use despite supplier denials.

Cenvat credit on PVC compound was held admissible where contemporaneous records such as stock ledger entries, RG-23A Part-I register, requisition-cum-issue slips and cheque payments evidenced receipt of inputs in the factory and their use in manufacture. Third-party statements denying supply were not enough to displace this documentary evidence, especially where no transporter evidence was produced and cross-examination was refused. The alleged closure of the original manufacturer, by itself, did not undermine the assessee's records. On that basis, the duty demand and penalties were found unsustainable.

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Issues: Whether Cenvat credit on PVC compound was admissible when the department alleged non-receipt of inputs and relied on third-party statements denying supply.

Analysis: The documentary record, including stock ledger entries, RG-23A Part-I register, requisition-cum-issue slips, and cheque payments, showed receipt of the inputs in the factory and their use in manufacture. The department's case rested on statements of suppliers denying supply, but no transporter evidence was produced, and the refusal to permit cross-examination weakened reliance on those statements. The closure of the alleged original manufacturer, by itself, was insufficient to displace the assessee's documentary evidence.

Conclusion: The assessee was entitled to the Cenvat credit, and the duty demand and penalties were not sustainable.

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