Suspicion cannot replace proof in bogus invoicing disputes where documents and banking records establish actual supply.

Penalty under Rule 25 of the Central Excise Rules was held unsustainable where invoices, transport documents, ledger records and banking entries supported actual supply of inputs and receipt of consideration. The recipient's records and statement also supported receipt and use of the goods in manufacture. Adverse inferences from third-party statements and alleged misuse of transport documents were found insufficient without cogent evidence of non-supply or cash-back. The decision reiterates that suspicion, however strong, cannot substitute for proof, and penalty based only on uncorroborated allegations of bogus invoicing cannot be sustained.

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Issues: Whether the penalty imposed on the dealer under Rule 25 of the Central Excise Rules was sustainable on the allegation that bogus cenvatable invoices were issued without actual delivery of goods and that the credit was passed on without physical movement of goods.

Analysis: The appellant produced invoices, transport documents and ledger records showing supply of inputs and receipt of consideration through banking channels. The recipient's records and statement also supported actual receipt of goods and use of the inputs in manufacture. The adverse inference drawn from third-party statements and alleged misuse of transport documents was held insufficient in the absence of cogent evidence of non-supply or cash-back. The decision emphasizes that suspicion, howsoever strong, cannot replace proof.

Conclusion: The penalty was not sustainable and was set aside in favour of the appellant.

Final Conclusion: The appeal succeeded because the evidentiary record established actual supply and payment through banking channels, defeating the allegation of bogus invoicing and warranting deletion of the penalty.

Ratio Decidendi: Where documentary and accounting evidence substantiates supply of goods and receipt of payment through banking channels, a penalty based only on suspicion or uncorroborated statements cannot be sustained.

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