Cenvat credit cannot be denied on retracted statements alone without independent corroborative evidence of diversion or non-receipt.

Cenvat credit could not be denied where statutory records, weighment slips, job work challans and production records consistently supported receipt and use of imported inputs in manufacture. The allegation of diversion rested mainly on statements recorded during investigation, but those statements were retracted in cross-examination or before a Magistrate. In the absence of independent corroboration showing non-receipt, substitution, diversion of goods or unaccounted cash flow, the Revenue failed to discharge its burden. The demand of duty, interest and penalty was therefore unsustainable, and the impugned orders were set aside with consequential relief.

---

---

Issues: Whether Cenvat credit could be denied on the allegation that imported raw materials were not actually received in the factory and were diverted elsewhere, and whether the demand of duty, interest and penalty could be sustained on the basis of statements without corroborative evidence.

Analysis: The statutory records, weighment slips, job work challans and production records did not show any discrepancy and supported the assessee's case that the goods were received and used in manufacture. The allegation rested substantially on statements recorded during investigation, but those statements were retracted in cross-examination or before a Magistrate. In the absence of independent material showing diversion of the goods, substitution of inputs, non-receipt in the factory, or unaccounted cash flow, the burden on the Revenue was not discharged. Mere statements, without corroboration, were held insufficient to sustain the charges.

Conclusion: The denial of Cenvat credit was unsustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned orders were set aside and the appeals were allowed with consequential relief.

Ratio Decidendi: Where the assessee's documentary records support receipt and use of inputs, retracted statements alone cannot sustain a demand unless independently corroborated by reliable evidence.

---