Cenvat credit cannot be denied on assumptions alone when receipt of inputs and diversion are unproven.

Cenvat credit cannot be denied merely because the goods received are described as finished products for another industry if there is no investigation or evidence showing that the inputs were not actually received in the factory or were diverted by the assessee or supplier. The denial based only on assumption and presumption was unsustainable, and the cited circular supported the view that steel former actually consumed and contained in ingots and billets qualifies as input. On that basis, the credit was held admissible and the impugned orders were set aside.

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Issues: Whether Cenvat credit could be denied on the ground that the goods received were finished products for some other industry and whether such denial was sustainable without investigation or evidence of non-receipt of inputs.

Analysis: The denial rested only on the premise that the goods shown as received by the assessee were finished goods in another industry and therefore could not be treated as inputs for the assessee. No investigation was conducted to verify whether the goods were actually received in the factory, nor was there evidence showing diversion by the assessee or the supplier. The allegation was thus based merely on assumption and presumption. The circular relied upon also clarified that steel former actually consumed and contained in ingots and billets is in the nature of an input.

Conclusion: Cenvat credit could not be denied to the assessee, and the impugned orders were set aside.

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