Burden to prove CENVAT credit availment defeated demand on waste and scrap clearance for lack of evidence.

Demand on clearance of waste and scrap was held unsustainable because the department failed to prove that CENVAT credit had actually been availed on the inputs or capital goods removed. Once the allegation of non-reversal was raised, the burden remained on the department to establish actual availment of credit; it could not shift that burden to the assessee without supporting evidence. The assessee's explanation and item-wise description of the goods were not displaced by any concrete verification or contrary material. The finding of mala fide intent against the public sector assessee was also unsupported by evidence, and the demand failed.

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Issues: Whether the demand on clearance of waste and scrap was sustainable when the department failed to prove that CENVAT credit had actually been availed on the inputs or capital goods removed.

Analysis: The department alleged that the assessee cleared waste and scrap without reversing credit, but produced no evidence to establish that CENVAT credit had in fact been taken on the items in question. Once such an allegation was made, the burden lay on the department to prove actual availment of credit. The assessee's explanation and item-wise description of the cleared goods was not discredited by any concrete verification or contrary material. In the absence of proof, the finding that the assessee had to disprove credit availment was erroneous. The conclusion that a public sector undertaking acted with mala fide intent was also unsupported by evidence.

Conclusion: The demand was held unsustainable and the assessee succeeded.

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