CENVAT credit and clandestine removal allegations require cogent corroborative evidence; unverified records and photocopies are insufficient.

CENVAT credit on melting scrap cannot be denied merely because one barrier record is missing where other movement records exist, payments were made by account-payee cheque, and no transporter evidence proves non-receipt; on those facts, fraudulent availment was not established. Differential customs duty and denial of CVD credit on imported scrap also fail where a Range Superintendent's certificate confirms use in manufacture and Revenue produces no rebuttal evidence; the end-use condition is treated as complied with. Allegations of clandestine removal based only on photocopies of parallel invoices, without proof of source or linkage to actual clearances, are insufficient to sustain duty demand. The governing principle is that such allegations require cogent corroborative evidence.

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Issues: (i) Whether CENVAT credit on melting scrap was wrongly taken on invoices issued by dealers without actual receipt of goods. (ii) Whether differential customs duty could be demanded and CVD credit denied on imported melting scrap on the ground that the goods were not received and the end-use condition was breached. (iii) Whether duty could be demanded on alleged clearances made on the strength of parallel invoices.

Issue (i): Whether CENVAT credit on melting scrap was wrongly taken on invoices issued by dealers without actual receipt of goods.

Analysis: The only basis for denial of credit was the absence of Punjab sales tax barrier entries, while entries at the Himachal Pradesh barrier were available. No transporter statements were recorded, and the payments were made by account-payee cheques. The allegation that the scrap originated from Delhi was not supported by cogent evidence showing movement through the relevant barriers or proving non-receipt of goods.

Conclusion: The charge of fraudulent availment of CENVAT credit was not proved and the demand on this account was rightly dropped.

Issue (ii): Whether differential customs duty could be demanded and CVD credit denied on imported melting scrap on the ground that the goods were not received and the end-use condition was breached.

Analysis: The respondent produced a certificate from the Range Superintendent certifying use of the imported scrap in manufacture of the final product. No contrary evidence was produced by Revenue. In the absence of evidence rebutting the certificate, the end-use condition under the relevant exemption notifications stood complied with.

Conclusion: The respondent was entitled to the concessional duty benefit and CVD credit could not be denied; the demand was unsustainable.

Issue (iii): Whether duty could be demanded on alleged clearances made on the strength of parallel invoices.

Analysis: Revenue produced only photocopies of alleged parallel invoices and failed to establish their source or provenance. No documentary foundation was shown to connect those photocopies with actual clandestine clearances. On that material, the allegation of clandestine removal was not established.

Conclusion: The demand based on parallel invoices was not sustainable.

Final Conclusion: The impugned order dropping the proceedings was affirmed and the Revenue's appeals failed.

Ratio Decidendi: Allegations of non-receipt of goods, wrongful credit, or clandestine removal must be proved by cogent corroborative evidence; unverified barrier records or unauthenticated photocopies are insufficient to displace documentary evidence such as payment records and end-use certification.

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