CENVAT Credit denial remanded for reconsideration based on document verification: CESTAT Kolkata in Indian Oil Corporation Ltd Vs Commissioner of CGST & Central Excise

Background of the dispute

In Indian Oil Corporation Ltd Vs Commissioner of CGST & Central Excise (CESTAT Kolkata), the assessee challenged an adjudication order that had partially upheld a demand of CENVAT Credit reversal. The controversy revolved around whether the assessee had furnished adequate supporting documentation to substantiate the CENVAT Credit availed under the CENVAT Credit Rules, 2004, and whether the adjudicating authority had properly appreciated such documents.

A Show Cause Notice had originally proposed a demand of Rs.4,18,73,419/-. On adjudication, the authority:

• Dropped a major part of the demand amounting to Rs.39,000,527/-, and
• Sustained a balance demand of Rs.28,72,890/-.

No appeal was preferred by the Revenue against the portion of the demand that was dropped. The assessee, however, challenged the confirmed demand of Rs.28,72,890/- before the Tribunal.

The Tribunal’s order dated 12/08/2026 therefore examines only the surviving demand of Rs.28,72,890/-, which was linked to denial of CENVAT Credit in five specific instances.

Key facts and figures from adjudication

Scope of the original demand

• A Show Cause Notice was issued proposing a duty demand of Rs.4,18,73,419/-.
• During adjudication, after examining certain records and explanations, the adjudicating authority:
  • Dropped the demand of Rs.39,000,527/- (stated as over Rs.3.90 crores in the order), and
  • Confirmed a demand of Rs.28,72,890/- on disputed CENVAT Credits.

Since the Revenue did not dispute the dropped amount, the controversy before the CESTAT Kolkata was confined to the residual amount of Rs.28,72,890/-.

Nature of the surviving dispute

The assessee’s stand before the Tribunal was that:

• The balance demand of Rs.28,72,890/- was entirely attributable to five items of CENVAT Credit which were disallowed.
• For each of these five items, the assessee asserted that all requisite documentary support existed and had been collated and submitted.
• The details of the confirmed demand were said to be reflected in a tabular statement at page 3 of the written submissions.

The assessee emphasised that the relevant supporting documents had been placed before the Tribunal as part of the appeal paper book, including documents compiled at Annexures 5, 6, 7 and 8, along with other parallel documentation.

The heart of the dispute, therefore, was not so much about the legal permissibility of CENVAT Credit in principle, but whether the evidence tendered by the assessee did, in fact, substantiate the credit claims for the period involved.

Arguments advanced before the Tribunal

Submissions on behalf of the assessee

Counsel for the assessee contended that:

• The entire confirmed demand of Rs.28,72,890/- was traceable to five distinct CENVAT Credit transactions.
• Each disallowance was attributable to what the adjudicating authority perceived as documentary deficiencies or lack of proper proof.
• However, the assessee maintained that valid and complete documentation existed to support all five credit entries. These documents, according to the assessee, were now on record before the Tribunal.
• The assessee particularly drew attention to the contents of Annexures 5, 6, 7 and 8, and other records filed with the paper book, as evidence that the CENVAT Credits had been legitimately availed.

The thrust of the assessee’s argument was that, if these documents were properly verified and appreciated, the disallowance would not survive.

Submissions on behalf of the Revenue