Cenvat credit requires corroborated evidence; untested third-party statements and transport discrepancies alone cannot justify denial or penalties.

Cenvat credit cannot be denied, and penalties cannot be sustained, merely on uncorroborated third-party statements, transport records, or alleged discrepancies in input movement when the assessee's statutory records, duty-paying documents, and banking-channel payments support receipt and consumption of inputs. Where witnesses were not cross-examined, some statements were retracted, no investigation was made at the assessee's premises or alleged alternative delivery points, and no independent evidence showed flow-back of consideration, adverse findings cannot rest on third-party material alone.

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Issues: Whether Cenvat credit could be denied and penalties sustained solely on the basis of uncorroborated third-party statements, transport records, and alleged discrepancies regarding receipt and movement of inputs, despite the assessee's statutory records, duty-paying documents, and banking-channel payments.

Analysis: The claims of non-receipt of goods were founded mainly on statements of consignors, transporters, truck administrators, octroi records, and RTO-related discrepancies. The assessee's records showed receipt and consumption of inputs, payments were made through banking channels, and no investigation was undertaken at the assessee's premises or at the alleged alternative points of delivery to disprove receipt. Several witnesses whose statements were relied upon were not subjected to cross-examination or retracted their statements, reducing their evidentiary value. The absence of corroborative material from the suppliers' end or any proof of flow-back of consideration meant that the adverse findings could not rest on third-party statements alone.

Conclusion: The denial of Cenvat credit was unsustainable, and the consequential penalties also could not survive.

Ratio Decidendi: Cenvat credit cannot be disallowed, and penalties cannot be imposed, merely on the basis of uncorroborated third-party statements or transport-related allegations when the assessee's statutory records and payment evidence support receipt of inputs and no independent investigation disproves the transactions.

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