Reliance on Unverified Transport Records insufficient to deny CENVAT credit or sustain penalties; appeals allowed.

Denial of CENVAT credit and imposition of penalties were found unsupported where revenue relied solely on VAHAAN portal checks and uncorroborated transporter statements; those statements were not verified under the required statutory procedure and suppliers were not investigated. It was an admitted fact that inputs were consumed in manufacture and duty was paid on clearances. Absent supplier-side enquiries or other corroborative documentary evidence establishing non-supply, the factual basis for denying credit and for penalties failed, and the impugned denial and penalties were set aside with the appeals allowed.

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Issues: Whether the denial of CENVAT credit availed by the appellant and the imposition of penalties under Rule 26(1) (and Rule 26(2)) of the Central Excise Rules, 2002 are justified.

Analysis: The revenue's case rested on transport-related verifications from the 'VAHAAN' portal and statements attributed to certain transporters, asserting that the vehicle types and transporter statements demonstrated non-supply of inputs by the suppliers to the appellant. No parallel investigation was conducted at the end of the suppliers who issued the invoices to verify whether goods were actually supplied, nor was evidence produced to show from where the appellants procured the large quantities of inputs used in manufacture. The transporters' statements were not verified in accordance with Section 9D of the Central Excise Act, 1944 and no supporting documentary evidence was produced to corroborate those statements. It is an admitted fact that the inputs were used in manufacture and duty was paid on clearances. Absent investigation of suppliers or other corroborative evidence, reliance solely on VAHAAN verification and unverified transporter statements does not constitute reliable evidence to deny CENVAT credit or to sustain penalties under Rule 26 of the Central Excise Rules, 2002.

Conclusion: The denial of the CENVAT credit and the imposition of penalties are set aside and the appeals are allowed; decision is in favour of the assessee.

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