CENVAT credit disallowance deleted where uncorroborated statements lacked cross-examination and Tribunal's factual findings were upheld.

The Tribunal's deletion of the CENVAT credit disallowance and consequential penalties was upheld because its findings rested on documentary records, banking-channel payments, statutory book entries, and the lack of reliable corroboration for the Department's allegations. The principal adverse third-party statements had not been tested by cross-examination, which reduced their evidentiary weight. The Court found no perversity in the Tribunal's appreciation of evidence and no showing that relevant material was ignored or irrelevant material relied upon. The factual conclusions therefore did not raise a substantial question of law, and interference was not warranted.

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Issues: Whether the Tribunal was justified in deleting the disallowance of CENVAT credit and setting aside the penalties on the basis that the Department's case rested mainly on uncorroborated third-party statements and material that was not tested by cross-examination.

Analysis: The Tribunal's findings were based on appreciation of the documentary records, banking-channel payments, entries in the assessee's statutory books, and the absence of reliable corroboration for the Department's allegations. Where the principal adverse statements were not subjected to cross-examination, their evidentiary value was weakened. The Court found that the Department had not shown any perversity in the Tribunal's appreciation of evidence, nor had it demonstrated that relevant material was ignored or irrelevant material relied upon. In such circumstances, the Tribunal's factual conclusions did not give rise to a substantial question of law.

Conclusion: The Tribunal was in deleting the disallowance of CENVAT credit and the consequential penalties, and no interference was warranted.

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