Denial of CENVAT credit based on third-party statements without granting the assessee an opportunity to cross-examine the witnesses constitutes a violation of the principles of natural justice, necessitating a remand for proper adjudication.

FINAL ORDER NO.75603-75604/2026 DATE OF HEARING : 11 MARCH 2026 DATE OF PRONOUNCEMENT : 20 MAY 2026 Per Ashok Jindal :

The appellant is in appeal against the impugned order denying cenvat credit availed on inputs and input services by the appellant along with interest of amounting to Rs.58,76,084/- and equivalent penalty.

2. The facts of the case are that the appellants are engaged in the manufacture of M.S. Ingot utilising the Scrap/M.s. Round Cuttings, Scrap (M.S. Round Cuttings/Short Length). During the ordinary course of their business, from September, 2009 to April, 2012, the appellants had purchased 2383.385 M.T. of input from M/s. Shree Ganesh Forging Company. The transportation of the goods were arranged by them. The appellants had duly received the goods in their factory and reflected the same in their RG23A Part-1 & Part-II. The appellants were utilising the inputs and manufacturing the finished goods and clearing the finished goods on payment of appropriate duty by utilising CENVAT credit. No dispute was raised by the Division or Range at any point of time. The appellant had also availed the credit of service tax against the service tax payment made to the GTA during the Financial Year 2009-10 to

2012-13 which was also not disputed.

2.1 The appellant was issued a Show Cause Notice on 20.08.2014 on the basis of some alleged intelligence and subsequent investigation as is appearing from the Show Cause Notice itself that the appellant had taken credit without receiving the goods or services. It appears from the Show Cause Notice that investigation was made at the suppliers' end on different dates who had said that they have supplied M.S. Round Cutting to the appellant. The statement of the Director of the appellant was also taken who had also stated that they had purchased the goods from M/s. Shree Ganesh Forging Company and reflected the receipt of the goods, availment of credit and utilisation of the same properly in their books. The transportation was also arranged by the appellant. To verify the genuineness of the transportation, the Department had taken the letters from different vehicle owners/transporters containing the statements of denial of transportation of goods from the factory of M/s. Shree Ganesh Forging Company to the factory of the appellant and some vehicles were also found to be not capable of carrying huge quantity of goods.

2.2 Wholly on the basis of this material, a conclusive/pre-judged Show Cause Notice has been issued making a inference that the appellant had taken credit without receiving the goods and the said credit has been proposed to be denied.

2.3 Against the said order, the appellant is before us.

3. The ld.Counsel appearing on behalf of the appellant submits that the appellant has purchased the goods against the invoices of M/s. Shree Ganesh Forging Company, which was reflected in the statutory records and there was no allegation that the appellant did not manufacture any goods by utilising those inputs and did not pay the duty on the finished goods. Only on the basis of some letters from few owners/transporters, it has been concluded that the appellant did not receive any goods and proposed to deny credit which cannot be maintainable in law.

3.1 It is further submitted that apart from those statements of some vehicle owners/transporters, there is no other corroborative evidence to show that the goods were not received by the appellant and in that view of the matter, credit cannot be denied. The appellant has paid through banking channel which has also not been disputed by the Revenue. Therefore, the cenvat credit has rightly taken by the appellant as there