Cenvat credit on recorded inputs upheld where statutory records, banking payments, and manufacturing use defeated uncorroborated supplier statements.

Cenvat credit on inputs cannot be disallowed, and penalty cannot be sustained, where the assessee received goods at the registered premises, maintained statutory records, used the inputs in manufacture, and made payments through banking channels. The Tribunal found no independent evidence of an alternative source of procurement or of cash return against cheque payments; the Revenue relied mainly on supplier and transporter statements linked to investigation. Applying its earlier decision in a similar matter, the Tribunal held that the evidentiary foundation for denying credit and imposing penalty was not made out, and the appeal was allowed in favour of the assessee.

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Issues: Whether denial of Cenvat credit on inputs and the accompanying penalty were sustainable where the inputs were recorded in statutory records, payments were made through banking channels, and the allegation rested mainly on statements and investigation against the supplier.

Analysis: The Tribunal followed its earlier decision in a similarly situated case arising from the same set of investigations. It noted that the appellant had received the goods at the registered premises, maintained statutory records, and used the inputs in manufacturing final products cleared on payment of duty. The Revenue could not point to any alternate source of procurement of inputs or produce independent evidence beyond statements of the supplier and transporters. The record also did not support the allegation that the cheque payments had been returned in cash. In these circumstances, the foundation for disallowing credit and sustaining penalty was not made out.

Conclusion: The denial of Cenvat credit and the penalty were not justified, and the appeal was allowed in favour of the assessee.

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