CENVAT credit and penalty fail where goods were received and fraud or non-receipt of inputs is not independently proved.

CENVAT credit cannot be denied merely on allegations of bogus invoices where the assessee establishes receipt of both the goods and the invoices, and the department produces no independent evidence of fraud or non-receipt of inputs. The manager's statement, read in context, did not prove availing of credit without actual receipt of goods, and supplier-side proceedings alone were insufficient to dislodge the concurrent factual findings. On those facts, the demand was unsustainable and penalty was not warranted, so the findings in favour of the assessee were left undisturbed.

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Issues: Whether CENVAT credit was inadmissible on the basis of allegedly fraudulent invoices and whether penalty was sustainable in the absence of proof that the goods were not received or that the assessee had committed fraud.

Analysis: The materials on record showed that the assessee had received both the invoices and the goods in its factory. The department failed to produce evidence to dislodge the concurrent factual findings of the lower authorities. The statement of the assessee's manager, when read in context, did not establish that the assessee had actually availed credit on bogus invoices without receipt of goods. The allegation of fraud was not supported in the show-cause notice by independent evidence. On these facts, the earlier findings that the demand could not be sustained and that penalty was not warranted were left undisturbed.

Conclusion: The CENVAT credit could not be denied on the facts proved, and penalty was not imposable. The findings in favour of the assessee were upheld.

Final Conclusion: The Revenue failed to establish a basis for interference with the concurrent orders, and the appeal was dismissed.

Ratio Decidendi: Where receipt of goods is established and the department cannot prove fraud or non-receipt of inputs, CENVAT credit and consequential penalty cannot be denied merely on allegations based on supplier-side proceedings.

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