Cenvat credit on inputs upheld where Revenue failed to prove non-receipt or absence of nexus with manufacture.

Cenvat credit on the disputed chemicals was held admissible where the assessee had consistently declared their use in manufacturing disproportionate resin and camphor, and those stated uses were not contradicted by the adjudicating authority. Denial based mainly on an alleged non-existent transporter and missing transport documents was found insufficient because the invoices carried lorry numbers, the transport enquiry was conducted much later than the relevant period, and no inquiry was made with the lorry owners or drivers. As the Revenue produced no positive evidence that the inputs were not received or that the final products were manufactured without them, the disallowance of credit was unsustainable.

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Issues: Whether Cenvat credit on the disputed chemicals was admissible, and whether the Revenue had proved non-receipt of the inputs or their lack of nexus with the manufacture of the final products.

Analysis: The assessee had made long-standing declarations regarding the use of the chemicals in the manufacture of disproportionate resin and camphor, and the stated uses were not contradicted by the adjudicating authority. The record showed that the denial was based mainly on the allegation that one transporter was non-existent and on the absence of some transport documents. However, the invoices contained lorry numbers, the transport enquiry was conducted much later than the relevant period, and no investigation was made with the lorry owners or drivers. The Revenue also failed to produce positive evidence showing that the inputs were not received or that the final products were manufactured without them.

Conclusion: Cenvat credit could not be denied on the alleged absence of nexus or alleged non-transportation of the inputs, and the disallowance of credit was unsustainable.

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