Cenvat credit denial needs corroborative evidence; an unverified dealer statement alone cannot sustain demand or penalty.

Cenvat credit cannot be denied, and penalty cannot be sustained, on the basis of an uncorroborated dealer statement alone alleging invoices without supply of goods. Where no statement of the buyer was recorded and no investigation was made with the transporter or manufacturer supplier to verify movement and delivery, the allegation of a paper transaction remains unsupported. The buyer's evidence that goods were received against the invoices was not displaced by any corroborative material from Revenue. A show cause notice cannot rest on presumptions and assumptions; denial of credit requires evidence establishing non-receipt of goods. On the available material, the demand and penalty were unsustainable.

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Issues: Whether Cenvat credit could be denied and penalty sustained merely on the basis of an uncorroborated statement that invoices were issued without supply of goods, in the absence of evidence from the appellant, transporter, or manufacturer supplier.

Analysis: The allegation of a paper transaction was founded on a statement made by the first stage dealer, but no statement of the appellant was recorded and no investigation was carried out at the end of the transporter or the manufacturer supplier to verify movement and delivery of goods. The buyer of the appellant had stated that goods were received against the invoices, and the Revenue did not adduce corroborative material to displace that evidence. A show cause notice cannot rest on presumptions and assumptions alone, and denial of credit requires supporting evidence to establish that the goods were not received.

Conclusion: Cenvat credit could not be denied on the available material, and the demand and penalty were unsustainable.

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