I've actually answered this question before, so here is my answer:

The story never happened. It's complete fiction.

But Bernardito, wasn't it included in the Guinness Book of World Records? Doesn't Wikipedia confirm as true?

Here we get to the interesting part.

First, the truth: February 1945. It's the final stages of William Slim's brilliant Burma campaign and the British have trapped a Japanese force counting around a thousand men in the islands of Ramree. Instead of surrendering, the Japanese commander chose to take his men across an unblocked route through ten miles of mangrove swamps. Many were already in a bad state entering the swamp. Malaria was rampant. As one can imagine, swamps are not pleasant places. They are filled not only with deadly insects and snakes but are truly a nightmare to get through. Out of 900 troops that went into the swamp, 500 made it out.

The myth: The above story except that by the end 20 troops were captured by the British, the rest were all killed by saltwater crocodiles. This is a 'reported account' from this encounter: "That night was the most horrible that any member of the ML crews ever experienced. The scattered rifle shots in the pitch black swamp punctured by the screams of wounded men crushed in the jaws of huge reptiles, and the blurred worrying sound of spinning crocodiles made a cacophony of hell that has rarely been duplicated on earth. At dawn the vultures arrived to clean up what the crocodiles had left... Of about 1,000 Japanese soldiers that entered the swamps of Ramree, only about twenty were left alive."

Why is this a sensationalist myth?

The observer of this is, according to most accounts, a certain Bruce Wright who for some reason was in this swamp where this is said to have taken place, sitting in a motor launch and witnessing this. Yet only Wright's Wildlife Sketches Near and Far exists as the single account for this to have happened.

There is no other single source that can verify this event to have happened and the actual survivors themselves that came out of the swamp is enough to disprove this myth. There is no mention of it in official British records and W.O.G. Potts did his own research into this with an incredibly detail investigation in which he interviewed a broad range of people which included Ramree islanders, survivors and soldiers. No one acknowledged that an incident like this had taken place.

Lastly, historian Frank McLynn has this to say in his book The Burma Campaign:

Most of all, there is a single zoological problem. If 'thousands of crocodiles' were involved in the massacre, as in the urban (jungle) myth, how had these ravening monsters survived before and how were they to survive later? The ecosystem of a mangrove swamp, with a exiguous mammal life, simply would not have permitted the existence of so many saurians before the coming of the Japanese (animals are not exempt from the laws of overpopulation and starvation).