Cenvat credit cannot be denied on isolated transport discrepancies when records and payments show receipt and use of inputs.

Cenvat credit cannot be denied merely on the basis of an RTO report and limited transporter statements where contemporaneous records show receipt of inputs, cheque-based payment, use in manufacture, and duty-paid clearance of final products. The Revenue must produce corroborative evidence of diversion, unaccounted procurement, stock shortage, or financial flow back before disallowing credit. Where statutory books, banking records, TDS deductions, and supporting statements consistently establish receipt and consumption of inputs, isolated transport-related discrepancies are insufficient to reject credit.

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Issues: Whether Cenvat credit could be denied solely on the basis of RTO reports and limited transporter statements, despite records showing receipt of inputs, payment by cheque, consumption in manufacture, and clearances on duty payment.

Analysis: The only adverse material was the RTO report suggesting that some vehicles were not capable of carrying the goods and the statements of two transporters. Against that, the appellant produced statutory records showing receipt of inputs, books of account reflecting purchase, cheque payments for goods and transport, deduction of TDS, and clearances of final products on payment of duty. The Revenue failed to adduce evidence of diversion of goods, procurement of unaccounted inputs, shortage in stock, or financial flow back. The statement of the managing director supported receipt and use of the inputs. The facts were closer to cases where credit was allowed on the strength of contemporaneous records and supporting evidence, and were materially different from cases involving multiple corroborative circumstances of non-receipt.

Conclusion: Denial of Cenvat credit was not justified and the appeals were allowed.

Ratio Decidendi: Cenvat credit cannot be denied merely on suspicion or isolated transport-related discrepancies when statutory records, banking-channel payments, consumption of inputs, and absence of diversion evidence collectively establish receipt and use of the goods.

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