Cenvat credit demand fails where documentary trail shows receipt of goods and cross-examination of witnesses was denied.

Cenvat credit demand based on alleged fake invoices was not sustained where the appellants produced invoices, transport documents, weighment slips, goods receipt notes and proof of banking payment to show receipt of goods. The department's challenge to the dealer's upstream procurement did not by itself establish that the appellants had not received the goods. Reliance on third-party statements without permitting cross-examination weakened the case, and the record did not contain credible contrary evidence rebutting the documentary trail. The demand was therefore not proved, and the impugned order could not be sustained.

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Issues: Whether the demand of Cenvat credit based on alleged fake invoices and absence of actual supply from the dealer to the appellants was sustainable when the appellants produced invoices, transport documents, weighment slips, goods receipt notes and proof of payment, and when cross-examination of relied-upon persons was denied.

Analysis: The demand rested on the premise that the dealer from whom the appellants purchased scrap had not actually received goods from upstream suppliers and therefore could not have supplied goods to the appellants. The evidence discrediting the dealer's inward procurement, however, did not complete the second link against the appellants. The appellants produced contemporaneous commercial records showing receipt of goods, transport documents and payment through banking channels, and the department did not rebut this documentary trail with credible contrary evidence. The statements of third parties were relied upon without allowing cross-examination, and the proprietor or authorised person of the dealer was not examined in a manner that conclusively established non-supply to the appellants.

Conclusion: The demand was not proved against the appellants, and the impugned order could not be sustained.

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