Cenvat credit survives retrospective dealer cancellation where invoices, records and receipt of inputs are duly supported.

Cenvat credit remained admissible where inputs were bought from a registered dealer, the invoices contained the prescribed particulars, the transactions were recorded in the buyer's books, and the inputs were shown as used in manufacture of dutiable final products. Retrospective cancellation of the dealer's registration did not by itself invalidate the credit, and general third-party statements alleging paper transactions were insufficient without specific evidence that the inputs were not actually received by the buyer. The governing verification focused on the identity of the supplier, not on tracing how the supplier procured the goods from elsewhere. On these facts, denial of credit was unsustainable.

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Issues: Whether Cenvat credit was admissible when the inputs were purchased from a registered dealer whose registration was later cancelled retrospectively, and whether the credit could be denied merely on the basis of general statements alleging paper transactions.

Analysis: The invoices were issued by a registered dealer and contained the requisite particulars, including the registration number. They were entered in the appellant's records and the inputs were shown to have been used in the manufacture of final products cleared on payment of duty. There was no specific evidence that the inputs were not actually received by the appellant or were procured from any other source. In such circumstances, the rule governing Cenvat credit required verification of the identity of the supplier, and not an inquiry into whether the supplier had obtained the goods in accordance with law from elsewhere. A mere retrospective cancellation of the dealer's registration and general statements of third parties, without naming the appellant or disproving receipt of inputs, were insufficient to deny the credit.

Conclusion: The denial of Cenvat credit was unsustainable and the credit was admissible to the appellant.

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