Cenvat credit on non-received goods fails where invoices are unsupported and fraud is independently established.

Cenvat credit was held inadmissible where the assessee failed to prove actual receipt of duty-paid HR trimmings, with the invoices, banking trail, and co-noticee material indicating a diversion scheme rather than genuine procurement. Denial of cross-examination did not vitiate the demand because independent documentary evidence already established non-receipt and no prejudice was shown. The limitation objection was rejected since availing credit without receipt of goods was treated as fraud and suppression inherent in the transaction. Penalties on the director, brokers, and transporter were upheld for their role in supervising, facilitating, and routing the fictitious movement and documents; the demand, interest, and penalties were sustained in full.

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Issues: (i) whether the appellants were entitled to Cenvat credit on HR trimmings allegedly purchased on invoices without receipt of the goods and whether denial of cross-examination vitiated the demand; (ii) whether the demand was barred by limitation; and (iii) whether penalties on the director, brokers, and transporter under the relevant excise provisions were sustainable.

Issue (i): whether the appellants were entitled to Cenvat credit on HR trimmings allegedly purchased on invoices without receipt of the goods and whether denial of cross-examination vitiated the demand.

Analysis: The record showed that the appellants produced no credible evidence of transport, receipt, or accounting of the goods in their factory, such as gate records, lorry receipts, weighment slips, or freight payments. The surrounding records from transporters and other material indicated diversion of the goods to Gujarat destinations, while the invoices alone were used to support credit. In such a manipulation, payment through banking channels did not establish genuineness. The request for cross-examination was directed mainly at co-noticees, and the absence of such cross-examination caused no prejudice because the demand was independently supported by documentary evidence and by the appellants' failure to show receipt of the goods.

Conclusion: The credit was wrongly availed without receipt of goods, and the objection based on denial of cross-examination failed.

Issue (ii): whether the demand was barred by limitation.

Analysis: The availment of credit without receipt of the duty-paid goods was treated as a clear case of fraud. In such circumstances, the normal limitation objection could not assist the appellants, because the suppression and manipulation were inherent in the transaction.

Conclusion: The plea of limitation was rejected.

Issue (iii): whether penalties on the director, brokers, and transporter under the relevant excise provisions were sustainable.

Analysis: The director was found to be supervising the operations and to be the beneficiary of the fraudulent arrangement. The brokers and transporter were found to have participated in the movement, concealment, and routing of goods and documents through a fictitious arrangement. For liability under the penal provisions, actual confiscation of the goods was not decisive where the persons were concerned in handling goods known or reasonably believed to be liable to confiscation, or in issuing and facilitating documents used for ineligible credit.

Conclusion: The penalties imposed on all the remaining appellants were upheld.

Final Conclusion: The Tribunal sustained the demand, interest, and penalties in full, and all the appeals were dismissed.

Ratio Decidendi: Cenvat credit cannot be allowed unless the assessee proves receipt of the duty-paid goods, and in a fraudulent invoice-based diversion scheme, absence of cross-examination of co-noticees does not vitiate the demand where independent evidence establishes non-receipt and active participation in the fraud.

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