Appeal restored; CENVAT/MODVAT credit allowed where documentary evidence proved receipt and transporter statements were insufficient

CESTAT (AT) allowed the appeal, restoring the original adjudicating authority's order and permitting CENVAT/MODVAT credit. The Tribunal found the lower appellate authority had relied solely on unstamped LRs and a transporter's statement without considering extensive documentary evidence (demand drafts, LRs naming the appellant as consignee, invoices) showing receipt and payment for inputs. The transporter's record describing goods as "miscellaneous" and the transporter's statement were held insufficient to rebut the appellant's evidence. As there was no independent corroboration by Revenue that inputs were not received, credit was allowed and the appeal decided for the appellant.

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Issues: (i) Whether denial of Cenvat/Modvat credit to manufacturers on the basis that transport LRs lacked check-post stamps and on transporter statements (alleging non-transportation) is justified where the manufacturers produced documentary evidence of receipt and payment.

Analysis: The adjudicating authority had examined documentary records produced by the assessees including RG-23A/Part I registers, Form No.19 issued by Sales Tax Department, purchase inward registers, weighment slips, ledger and bank records showing payments by demand draft, and concluded that these supported actual receipt of inputs by the assessees. The appellate authority reversed that finding relying primarily on absence of check-post stamps on certain LRs and on transporters' statements; however, the Tribunal found that the transporter statements were akin to statements of co-accused and could not be the sole basis for denying credit without independent corroborative material. The Tribunal emphasised that where the Revenue alleges non-receipt of inputs, the burden to prove non-receipt rests on Revenue and must be discharged by sufficient evidence; mere discrepancy in transporter's goods register (e.g., description as "miscellaneous") or absence of check-post stamps, without more, does not conclusively establish non-transportation or non-receipt when assessees have contemporaneous documentary records recorded in RG-23A and related registers.

Conclusion: The appeals are allowed and the impugned orders denying Cenvat/Modvat credit are set aside; the orders of the original adjudicating authority dropping the show cause notices are restored, i.e., decision in favour of the assessees.

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