CENVAT credit demand fails where untested statements and uncorroborated documents cannot prove alleged material mismatch.

Demand for wrongly availed CENVAT credit and the related penalty failed because the department relied mainly on dealer statements that were not examined in adjudication as required by Section 9D of the Central Excise Act, making them inadmissible for that purpose. The remaining documents, including the SAIL letter and laboratory report, were not independently supported by the assessee's own test report, and oral statements could not be used to prove the contents of documentary evidence without a proper legal foundation. As the alleged material mismatch was not proved through admissible and corroborated evidence, the demand and penalty were set aside with consequential relief.

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Issues: Whether the demand of wrongly availed CENVAT credit and the consequential penalty could be sustained on the basis of statements and other materials relied upon by the department.

Analysis: The demand was founded substantially on statements of dealers who were not examined in adjudication in the manner required under Section 9D of the Central Excise Act, 1944, making such statements inadmissible for reliance. The remaining material, including the SAIL letter and the laboratory report, was not supported by the appellant's own lab test report, and the conclusion was drawn by relying upon oral statements to prove the contents of documentary evidence. Under the rules of evidence, the contents of a document must be proved by primary evidence, and oral evidence cannot substitute for the document itself in the absence of a legally recognised foundation. As the departmental case rested on uncorroborated and procedurally defective statements, the alleged mismatch in material composition was not established in law.

Conclusion: The demand and penalty were not sustainable and were set aside, with consequential relief to the assessee.

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