Cenvat credit on alleged paper transactions cannot be denied without cogent proof of non-receipt of goods.

Cenvat credit cannot be denied merely because the first-stage dealer is alleged to be non-existent or the transactions are suspected to be only on paper, where the recipient produces duty-paid invoices, RG-23 entries and weightment slips evidencing receipt of goods. Rule 9(3) requires reasonable verification of the supplier's identity and address, but once contemporaneous records are furnished, the burden shifts to the Revenue to prove non-receipt with cogent evidence. In the absence of any investigation at the manufacturer-supplier or transporter level, mere suspicion about the dealer's premises or godown was insufficient. The demand, interest and penalty were set aside.

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Issues: Whether Cenvat credit could be denied on the ground that the goods were alleged to be covered only by paper transactions and the first-stage dealer was found non-existent.

Analysis: The appellant produced duty-paid invoices, entries in the RG-23 register, and weightment slips to show receipt of the goods. Rule 9(3) of the Cenvat Credit Rules, 2002 requires the recipient to take reasonable steps to verify the identity and address of the supplier, but once invoices and supporting records are produced, the burden shifts to the Revenue to establish that the goods were not actually received. No investigation was conducted at the end of the manufacturer-supplier or the transporter, and the mere allegation that the registered dealer was non-existent or had no godown was not sufficient by itself to dislodge the credit. The fact that the dealer was registered with the department also weighed against the Revenue's case.

Conclusion: Cenvat credit could not be denied and the allegation of non-receipt of goods was not sustained in favour of the assessee.

Final Conclusion: The demand, interest, and penalty were set aside and the appeal succeeded.

Ratio Decidendi: Where a recipient produces valid invoices and contemporaneous records showing receipt of goods, the Revenue must prove non-receipt by cogent evidence, and denial of Cenvat credit cannot rest merely on suspicion about the dealer's existence.

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