Cenvat credit on trader-issued invoices fails where the recipient knew the supplier was not a manufacturer.

Cenvat credit is not available on invoices issued by a trader who is not a manufacturer, because such invoices do not constitute valid duty paying documents for credit purposes. Where the assessee knew the supplier's status as a non-manufacturer, that knowledge negates any claim of reasonable care in verifying eligibility under the credit rules, and the documents cannot support availment of credit. The stated effect is that credit was inadmissible and its denial was upheld in favour of Revenue.

---

---

Issues: Whether Cenvat credit could be availed on invoices issued by a trader who was not a manufacturer, and whether the assessee had exercised reasonable care in verifying the eligibility of the documents for credit.

Analysis: Credit was taken on invoices issued by a person who was admittedly only a trader and not a manufacturer. Under the Cenvat scheme, only valid duty paying documents issued by a manufacturer could support availment of credit in the circumstances considered. The assessee's knowledge of the supplier's status negatived any claim of reasonable care under the credit provisions, and the invoices could not be treated as proper duty paying documents for the purpose of availing credit.

Conclusion: The credit was not admissible and its denial was upheld, in favour of Revenue.

Final Conclusion: The appeal failed because credit could not be sustained on documents issued by a non-manufacturer known to be such by the assessee.

Ratio Decidendi: Cenvat credit cannot be allowed on invoices that are not valid duty paying documents, especially where the recipient knows that the issuer is not a manufacturer and has not exercised reasonable care under the credit rules.

---