Cenvat credit and clandestine removal require reliable corroboration; unverified slips and vague statements are not enough.

Cenvat credit disputes based on alleged clandestine removal require reliable corroborative evidence; handwritten kacha slips, unverified employee or driver statements, and similar untested material are insufficient by themselves. Where the assessee's statutory records show the goods in RG-23A Part-I and investigation does not reveal any stock discrepancy, the allegation is materially weakened and cannot be sustained without stronger supporting proof. On that basis, the denial of credit and related penalties were held unsustainable, and the impugned orders were set aside.

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Issues: Whether the denial of Cenvat credit and penalty could be sustained on the basis of kacha slips, statements of employees, buyers and a truck driver to allege clandestine removal of raw material.

Analysis: The Revenue's case rested primarily on handwritten kacha slips recovered from the premises, but their author was not examined on the entries and the Director's statement supported the explanation that the entries represented internal movement of goods within the factory. The buyers' statements did not support clandestine clearance of raw material, and the driver's statement was found too vague to establish identity of goods, destination or other material particulars. The goods had been reflected in the statutory RG-23A Part-I register and stock discrepancy was not found during investigation, which weakened the allegation that the raw material had been removed after availment of credit. In the absence of reliable corroboration, the allegation of clandestine removal could not be accepted.

Conclusion: The denial of Cenvat credit and the penalties were unsustainable; the appeals were allowed and the impugned orders were set aside.

Ratio Decidendi: An allegation of clandestine removal affecting Cenvat credit must be supported by reliable corroborative evidence, and uncorroborated slips or vague statements are insufficient where the assessee's statutory records and surrounding facts do not substantiate the charge.

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