CENVAT credit requires actual receipt of goods; paper-based credit was rejected and the demand sustained.

CENVAT credit was not available where the record showed that the supplier's goods were diverted and never reached the recipient for further processing. Credit taken only on documents, without actual receipt of goods, failed the basic requirement for admissibility. The objection that cross-examination had been denied was treated as a delaying tactic and did not displace the finding that the credit was paper-based. On that basis, the demand was sustained.

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Issues: Whether CENVAT credit was admissible when the goods were found not to have been received by the appellant and only paper credit had been passed on.

Analysis: The adjudication record showed that the supplier's goods were diverted and did not reach the appellant for further processing. On that footing, the objection regarding denial of cross-examination was treated as a delaying tactic and did not displace the finding that the credit was based only on documents without actual receipt of goods. Since the goods had not reached the appellant, the basis for availing credit failed.

Conclusion: CENVAT credit was held inadmissible and the demand was sustained.

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