Cenvat credit burden shifts when records and surrounding evidence suggest inputs were not actually received in manufacture.

Cenvat credit on disputed inputs was denied because the surrounding evidence indicated that the inputs shown in the invoices were not actually received or used in manufacture. The Tribunal relied on the later High Court decision in Ranjeev Alloys and the third-member view in Bhagwati Steelcast to apply the principle that, where shortage records, transport-related material, and the director's statement cast doubt on receipt, the burden shifts to the assessee to explain actual receipt and use. It also rejected remand, noting that the relevant facts had already been examined. The denial of credit, demand of duty with interest, and penalties were upheld.

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Issues: Whether the appellants had received the inputs on which Cenvat credit was taken and, if not, whether the denial of credit, interest, and penalties were sustainable.

Analysis: The disputed issue turned on whether the inputs shown in the invoices were actually received and used in manufacture. The appellate authority had considered the shortage of raw material and finished goods, the transport-related material, and the statement attributed to the director. The Tribunal held that the later decision of the High Court in Ranjeev Alloys, together with the third-member view in Bhagwati Steelcast, supported the proposition that where surrounding evidence shows the inputs could not have been received as claimed, the burden shifts to the assessee to explain receipt and use. Applying that approach, the Tribunal found that the department had reasonably discharged its burden and that the plea for remand was not acceptable because the relevant facts had already been considered.

Conclusion: The denial of Cenvat credit, the demand of duty with interest, and the penalties were upheld, and the appeals were rejected.

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