Cenvat credit denied for invoice-only transactions where unretracted statements proved no goods were actually supplied.

Cenvat credit is not admissible where invoices do not correspond to actual supply of goods, and unretracted statements showing that only invoices were issued on commission with cash cycling back can be relied on as substantive evidence. On the facts, the importer's statement and that of his employee established that no goods accompanied the invoices, so the record supported the finding that the scrap was not actually supplied. The denial of credit was therefore upheld, and the challenge to the demand and penalty failed.

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Issues: Whether Cenvat credit was admissible on invoices where the goods were found not to have been supplied, and whether the denial of credit and penalty were justified.

Analysis: The credit was taken on invoices issued by a registered dealer who claimed to have sourced the scrap from an importer. The statements of the importer and his employee, which were not retracted, categorically stated that no goods accompanied the invoices and that only invoices were issued on commission while the payments were cycled back in cash. Such unretracted statements were treated as substantive evidence. On that basis, the record supported the finding that no material was actually supplied under the invoices relied upon by the appellant.

Conclusion: Cenvat credit was rightly denied, and the challenge to the confirmation of demand and penalty failed.

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