Cenvat credit reversal demand fails where Revenue cannot prove actual credit availed on sold plant and machinery.

A demand for reversal of Cenvat credit on sale of plant and machinery was found unsustainable where the Revenue did not prove that credit had actually been availed on the sold assets. The audit objection relied on the assessee's balance sheet and the fact of sale, but no evidence was produced to establish prior availment of credit. The burden to prove such availment lay on the Revenue, and without that foundation a presumption of required reversal could not stand. The assessee therefore succeeded.

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Issues: Whether the demand for reversal of Cenvat credit on sale of plant and machinery was sustainable when the Revenue had not established that Cenvat credit had actually been availed on such plant and machinery.

Analysis: The demand arose from an audit objection based on the assessee's balance sheet showing receipt on sale of plant and machinery. No evidence was produced to show that Cenvat credit had been taken in relation to the sold assets. In the absence of such proof, the presumption that credit had been availed and was required to be reversed was held to be unsustainable. The burden to establish availment of credit lay on the Revenue, and that burden was not discharged.

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

Ratio Decidendi: A demand for reversal of Cenvat credit cannot be sustained unless the Revenue first proves that such credit was actually availed in respect of the relevant goods or assets.

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