Cenvat credit denial for fictitious factory records and unregistered manufacture upheld with interest and penalty sustained.

Cenvat credit was treated as inadmissible where returns and invoices showed a factory address that no longer existed, while the actual manufacturing activity was carried on from an unregistered unit. On those admitted facts, the claim that inputs were duly received and used in manufacture could not be sustained, and the credit was found to have been fraudulently availed and passed on through non-existent factory documentation. The absence of the exact cash-duty quantum in the notice did not defeat the demand because the core violation was the improper availment of credit. Interest and penalty were therefore sustained.

---

---

Issues: Whether Cenvat credit taken on inputs was liable to be disallowed, along with interest and penalty, where the appellant showed a factory address that was not in existence, had an unregistered unit at another location, and filed ER-1 returns on that basis.

Analysis: The appellant did not dispute that the factory shown in the returns had been sold and was not in existence during the relevant period, that the goods were manufactured at an unregistered unit, and that the returns continued to reflect the old address. In such circumstances, the claim that inputs were duly received and used in manufacture could not be accepted. The surrounding facts showed that the credit was availed and passed on through invoices issued from a non-existent factory. The cited precedents did not assist the appellant because they did not involve a fictitious factory or manufacture claimed from an unregistered unit. The omission in the show cause notice regarding the exact quantum of duty paid in cash did not undermine the demand, since the core violation was the fraudulent availment and passing on of credit.

Conclusion: Cenvat credit was rightly denied and the consequential interest and penalty were correctly sustained; the appeal failed.

Ratio Decidendi: Cenvat credit can be denied where it is availed and passed on on the basis of invoices and returns showing a factory that was not in existence and the claimed manufacture is traced to an unregistered unit, since such facts establish fraudulent availment of credit.

---