CENVAT credit cannot be denied on bogus invoice allegations when receipt of goods is proved and fraud is unproven.

CENVAT credit could not be denied where both lower authorities had found that the assessee received the goods in its factory as well as the invoices, and the department produced no evidence to dislodge those findings or to show the assessee's participation in any supplier-side fraud. The Revenue's reliance on a statement did not outweigh the evidence on record, and the cited precedents were distinguished because they involved cases where goods were not received or invoices were not issued in the ordinary course of trade. In the absence of proof supporting the demand, the penalty also could not be sustained, and the Revenue's appeal failed.

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Issues: Whether CENVAT credit was wrongly availed on the basis of alleged bogus invoices and whether penalty could be sustained.

Analysis: The respondent was found by both lower authorities to have received not only the invoices but also the goods in its factory. The department failed to adduce any evidence to dislodge those concurrent findings or to show that the respondent had participated in any fraud committed by the supplier. The statement relied upon by the Revenue did not override the findings recorded on the evidence, and the cited precedents were distinguished on facts because they concerned situations where goods were not received or invoices were not in the normal course of trade. The show-cause notice was also under challenge on limitation, and penalty could not be sustained in the absence of proof supporting the demand.

Conclusion: The CENVAT credit could not be denied and penalty was not sustainable; the Revenue's appeal failed.

Ratio Decidendi: Where receipt of goods is established and the department fails to prove fraud or suppression against the assessee, CENVAT credit cannot be denied merely on allegations against the supplier and penalty is not imposable.

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