Cenvat credit denial fails where invoice-only procurement is unproved and records show receipt, payment, manufacture, and clearance.

Denial of Cenvat credit and related penalty could not be sustained where the allegation of invoice-only procurement was not supported by transaction-specific evidence. The statements relied upon were general and vague, the deponents were not examined on the disputed invoices, and the statutory records showed receipt of inputs. Payment was made through banking channels, and there was no evidence of input shortage or any finding rebutting manufacture and clearance of final products. The demand was therefore based on presumption rather than proof, and the credit denial and penalty were set aside with consequential relief.

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Issues: Whether the denial of Cenvat credit and consequential penalty could be sustained on the basis that the appellant had received only invoices and not goods.

Analysis: The demand was founded on statements and documents that did not specifically identify or test the disputed invoices. The persons whose statements were relied upon were not questioned on the particular transactions in issue, and the statements remained general and vague. The receipt of inputs was reflected in the appellant's statutory records, payment was made through banking channels, and there was no evidence of shortage of inputs or final products or any finding disproving manufacture and clearance of final products. In these circumstances, the allegation rested on presumption rather than concrete proof.

Conclusion: The denial of Cenvat credit and the related penalty were not sustainable and are set aside in favour of the assessee.

Final Conclusion: The impugned order was annulled and the appeal succeeded with consequential relief.

Ratio Decidendi: A demand for denial of Cenvat credit cannot be upheld where the allegation of invoice-only procurement is unsupported by transaction-specific evidence and the record instead shows receipt of inputs, payment, manufacture, and clearance of final products.

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