CENVAT credit on disputed dealer invoices denied where actual receipt of duty-paid inputs was not proved, and extended limitation applied.

CENVAT credit on scrap routed through dealers was held inadmissible where the assessee could not prove receipt of the very duty-paid inputs described in the invoices. The Tribunal relied on check-post reports, supplier statements, and transport evidence to conclude that the ship-breakers' goods did not reach the assessee through the dealer chain. Credit was also denied on invoices bearing duplicate or parallel serial numbers because repeated discrepancies, unreliable vehicle particulars, and the absence of inward records such as gate registers or GRNs left the burden of proof undischarged. The Tribunal further held that fake or unsupported invoices justified invocation of the extended period, so the demand was not time-barred.

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Issues: (i) whether CENVAT credit was admissible on invoices issued by the dealers in respect of goods said to have originated from ship-breakers and routed through the dealers; (ii) whether CENVAT credit was admissible where the invoices bore duplicate or parallel serial numbers and the corresponding transport details were found unreliable; (iii) whether the extended period of limitation was invocable and the demands were time-barred.

Issue (i): whether CENVAT credit was admissible on invoices issued by the dealers in respect of goods said to have originated from ship-breakers and routed through the dealers.

Analysis: The governing scheme placed the burden on the manufacturer taking credit to show receipt of duty-paid inputs and compliance with the requirement of taking reasonable steps. The evidence relied upon by the Revenue included reports of the Gujarat Sales Tax authorities showing that consignments allegedly moving from the ship-breakers did not cross the check-post, statements indicating that some suppliers had closed their activities or had supplied different material, and transport-related evidence suggesting that the dealers could not have received or passed on the same duty-paid scrap. The contrary plea that the appellants were bona fide purchasers was rejected because the record did not establish that the very duty-paid goods described in the dealer invoices had been received by them.

Conclusion: CENVAT credit on the ship-breakers route invoices was not admissible and the finding was against the assessee.

Issue (ii): whether CENVAT credit was admissible where the invoices bore duplicate or parallel serial numbers and the corresponding transport details were found unreliable.

Analysis: The invoices were found to have the same serial numbers as other invoices issued to different parties, while the entries relied upon by the appellants were not reflected in the dealer records in the manner required by the rules. In a large number of cases the vehicle numbers mentioned in the invoices corresponded to non-transport vehicles, and the appellants did not produce reliable corroboration such as gate registers, consignee copies, GRNs, or other inward records to show actual receipt. The explanation of clerical or human error was rejected in view of the repeated and widespread nature of the discrepancies. The statutory burden to prove eligibility to credit was held to remain undischarged.

Conclusion: Credit on the duplicate or parallel invoices was not admissible and the finding was against the assessee.

Issue (iii): whether the extended period of limitation was invocable and the demands were time-barred.

Analysis: Once the underlying invoices were found to be fake, invalid, or otherwise not supported by proof of actual receipt of the corresponding duty-paid goods, the case fell within the category of fraudulent availment of credit. The appellants could not rely on departmental knowledge of the dealers' activities or on the fact that the dealers were investigated earlier, because limitation turned on the statutory ingredients for invoking the larger period. The Tribunal held that the absence of proof of genuine receipt, coupled with the fraudulent nature of the documents, justified invocation of the extended period.

Conclusion: The extended period of limitation was rightly invoked and the demand was not time-barred.

Final Conclusion: On the overall statutory and factual assessment, the appellants failed to establish admissibility of the credit and failed to defeat the extended-period demand, so the appeals stood rejected.

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