CENVAT credit on dealer invoices cannot be denied merely because the dealer's procurement source is questioned.

CENVAT credit cannot be denied merely because a registered dealer's invoice source is questioned, where the invoices are otherwise proper cenvatable documents and the Revenue fails to establish any alternative procurement source to dislodge the claim. The analysis relies on prior decisions and Rule 7(4) of the CENVAT Credit Rules, 2002, together with a consistent view in similar matters involving the same dealer. On that basis, denial of credit was held unjustified, and the consequential penalty could not stand.

---

---

Issues: Whether CENVAT credit could be denied on the ground that the registered dealer who issued the invoices had not procured the goods from the manufacturer, and whether penalty could survive on that basis.

Analysis: The invoices were issued by a registered dealer and were treated as proper cenvatable invoices. The Tribunal relied on earlier decisions holding that credit cannot be denied merely because the dealer's source of procurement was questioned, especially where the Revenue did not establish any alternate source of procurement to dislodge the credit claim. The Tribunal also noted the relevance of Rule 7(4) of the CENVAT Credit Rules, 2002 and the consistent view taken in comparable matters involving the same dealer.

Conclusion: The denial of CENVAT credit was unjustified, and the consequential penalty also could not stand.

---