Cenvat credit denial upheld where private records and statements showed diversion of inputs for scrap and supported extended limitation.

Private records and corroborative statements showed that duty-paid inputs were diverted and scrap was used in manufacture, justifying denial of Cenvat credit. The tribunal accepted the private disposal register and the statements of the Managing Director and General Manager as evidence of the exchange of inputs for scrap, and rejected the contention that the case rested on assumptions. On that basis, the longer limitation period was held applicable, and the demand of duty, confiscation, and penalties were maintained.

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Issues: Whether the appellants had wrongly availed Cenvat credit by diverting duty-paid inputs in exchange for scrap, and whether the demand, invocation of the extended period, confiscation and penalties were sustainable.

Analysis: The material on record, including the private record produced by the appellants and the statements of the Managing Director and the General Manager, established that cenvatable inputs were diverted and scrap was used in manufacture. The explanation that the case rested on assumptions was rejected because the records and statements consistently showed exchange of inputs for scrap. The existence of the private disposal register also supported the invocation of the longer limitation period.

Conclusion: The demand of duty was upheld, the extended period was sustained, and the confiscation and penalties were maintained.

Ratio Decidendi: Where private records and corroborative statements establish diversion of duty-paid inputs and use of scrap in manufacture, Cenvat credit can be denied and the extended limitation period invoked.

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