CENVAT credit denial cannot rest solely on untested transporter statements without cross-examination or corroboration.

Denial of CENVAT credit based only on statements of vehicle owners or transporters, without corroborative evidence of non-receipt of goods, could not be upheld where cross-examination was denied. The statements were used against the assessee, so the makers had to be produced for cross-examination; absent that opportunity, the material lacked safe evidentiary value and the adjudication breached natural justice. The credit denial was therefore unsustainable on the existing record, and the matter was remanded to the adjudicating authority for cross-examination and fresh decision.

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Issues: Whether denial of CENVAT credit based solely on the statements of vehicle owners or transporters, without affording cross-examination and without corroborative evidence, could be sustained.

Analysis: The sole basis for the demand was the statements of vehicle owners or authorised persons alleging non-transport of goods. No independent corroborative material was brought on record to establish non-receipt of raw materials in the factory. Since those statements were relied upon against the assessee, the persons who made them had to be made available for cross-examination. In the absence of such opportunity, the statements could not be safely relied upon, and the adjudication suffered from breach of natural justice.

Conclusion: The denial of credit could not be sustained on the existing record, and the matter required remand to the adjudicating authority for cross-examination and fresh decision.

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