CENVAT credit denial failed where uncorroborated supplier statements and no independent evidence could not prove receipt of different goods.

Denial of CENVAT credit and connected penalties was unsustainable where the department relied mainly on supplier statements without independent corroboration. A retracted statement was not reliable, the remaining dealers were not cross-examined, and the lab in-charge's statement did not establish that the samples differed from the invoiced goods. In the absence of seizure, sampling, testing, or other substantive evidence showing receipt of different goods than those declared, the allegation remained unproved even on a preponderance of probability. The impugned order was set aside and relief was granted to the assessee on the credit demand and penalties.

---

---

Issues: Whether the denial of CENVAT credit and the consequential penalties were sustainable when the department's case rested principally on statements of suppliers and no independent corroborative evidence established receipt of different goods than those invoiced.

Analysis: The allegation was that the assessee had availed credit on non-duty paid inputs received under invoices describing different goods. The department relied mainly on statements of dealers and a lab in-charge. One dealer's statement was retracted in cross-examination, while the remaining dealers were not subjected to cross-examination. The lab in-charge's statement did not establish that the tested samples were different from the invoiced goods. There was no seizure, sampling, testing, or other independent evidence showing that what was received differed from what was declared in the invoices. In these circumstances, the evidentiary basis remained unsupported and did not establish even a preponderance of probability.

Conclusion: The denial of CENVAT credit and the penalties were not sustainable. The appeal was decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the assessee was granted relief on the CENVAT credit demand and connected penalties.

Ratio Decidendi: Allegations of wrongful availing of CENVAT credit must be proved by substantive and corroborated evidence; untested or retracted statements alone are insufficient to sustain demand and penalty.

---