Cenvat credit on trader-issued invoices fails where the recipient lacks reasonable care and valid duty paying documents.

Cenvat credit was inadmissible on invoices issued by a trader after omission of Rule 12B of the Central Excise Rules, 2002, because the trader could not be treated as a manufacturer and the recipient could not rely on those invoices as valid duty paying documents. The recipient was found to have known the supplier's status and therefore failed to show the reasonable care required under Rule 9 of the Cenvat Credit Rules, 2004. On that basis, the documents used for credit did not satisfy the conditions for availment of Cenvat credit, and denial of credit was upheld.

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Issues: Whether Cenvat credit could be denied when the invoices were issued by a trader who was not a manufacturer after omission of Rule 12B of the Central Excise Rules, 2002, and whether the recipient had taken reasonable care for availing credit on valid duty paying documents.

Analysis: Credit was claimed on invoices issued by M/s. Keetex, which was admittedly only a trader. After omission of Rule 12B by Notification No. 11/2004-C.E. (N.T.) dated 09-07-2004, such supplier could not be treated as a manufacturer. The recipient knew this position, and therefore could not establish reasonable care as required under Rule 9 of the Cenvat Credit Rules, 2004. The documents relied upon for credit were not valid duty paying documents for the purpose of Rule 6 of the Cenvat Credit Rules, 2004, since only an invoice issued by a manufacturer could support availment of credit in the circumstances.

Conclusion: Cenvat credit was not admissible on the invoices issued by the trader, and the denial of credit was upheld.

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