Cenvat credit cannot be denied by ignoring contemporaneous evidence; excise authorities must assess the record as a whole.

Cenvat credit, rebate and related penalties could not be sustained where the adjudicating authority ignored contemporaneous documentary and departmental evidence and insisted on personal witnessing of manufacture. The record-based nature of excise adjudication required assessment of the evidence as a whole, including material supporting the suppliers' capacity to manufacture and the actual movement of inputs to the factory. On that basis, the allegations of non-receipt of inputs and bogus invoices were not established, and the demands, interest and penalties were set aside.

---

---

Issues: Whether denial and recovery of Cenvat credit, rebate and related penalties on the allegation of non-receipt of inputs and bogus invoices were sustainable.

Analysis: The appeals turned on whether the suppliers had the capacity to manufacture and whether the inputs had in fact moved to the appellant's factory. The adjudicating authority rejected documentary and departmental evidence, including prior orders, physical verification reports, transport records and other contemporaneous material, on the ground that the officers had not personally witnessed manufacture. That approach was found unsustainable because excise adjudication is record-based and the evidence had to be considered in totality. The additional evidence also supported the existence of manufacturing activity and movement of goods, and the investigations were found inadequate to displace that material.

Conclusion: The denial of Cenvat credit, recovery of rebate and imposition of penalties were set aside.

Final Conclusion: The appeals succeeded and all demands, interest and penalties were quashed with consequential relief.

Ratio Decidendi: In excise adjudication, credit cannot be denied by disregarding contemporaneous documentary and departmental evidence on an insistence on personal witnessing of manufacture, and the evidence must be assessed as a whole before alleging fraudulent availment.

---