CENVAT credit cannot be denied when manufacturer invoices establish the goods' movement chain and actual receipt by the buyer.

CENVAT credit could not be denied merely because the registered dealers had not purchased the goods directly from the manufacturer where the manufacturer's invoices named the dealers as consignees, the chain of movement was established, and the goods were actually received in the appellant's factory and used in manufacture. In those circumstances, the dealers' invoices were accepted as valid duty-paying documents for availing credit. The denial of credit and consequential penalties were therefore set aside, and the assessee's entitlement to credit was upheld.

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Issues: Whether credit could be denied merely because the registered dealers did not purchase the goods directly from the manufacturer, when the manufacturer's invoices showed the dealers as consignees and the goods were received and passed on to the appellant on that basis.

Analysis: The invoices issued by the manufacturer showed the names of the registered dealers as well as the customer, and the goods were found to have moved directly to the dealers and then to the appellant. The link between the manufacturer, the registered dealers and the appellant was established from the invoices and the goods were received in the appellant's factory and used in the manufacture of final products. In these circumstances, the objection that the dealers had not purchased the goods directly from the manufacturer was held not sufficient to reject the credit. The invoices issued by the registered dealers were treated as valid duty paying documents for availing credit.

Conclusion: Credit could not be denied on the stated ground, and the assessee was entitled to avail the credit.

Final Conclusion: The denial of credit and the consequential penalties were set aside and the appeals succeeded.

Ratio Decidendi: Where the manufacturer's invoice establishes the chain of movement and the goods are actually received and used by the buyer, credit cannot be denied solely because the intermediary dealer did not purchase the goods directly from the manufacturer.

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