Cenvat credit cannot be denied on uncorroborated paper-transaction allegations when duty-paid invoices and records support receipt.

Cenvat credit could not be denied merely on the allegation that the invoices were paper transactions and the goods were not physically received. Duty-paid invoices and entry in the RG-23 register supported the assessee's claim, while the Revenue relied mainly on the alleged non-existence of the first-stage dealer without corroborating evidence from the transporter or the actual manufacturer/supplier. In the absence of such verification and where the dealer was shown as a registered dealer during the relevant period, the burden of proving non-receipt of goods was not discharged. Denial of Cenvat credit was therefore not justified.

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Issues: Whether Cenvat credit could be denied on the ground that the invoices were only paper transactions and the goods were not physically received by the assessee.

Analysis: The assessee had produced duty-paid invoices and the transactions were reflected in the RG-23 register. The Revenue relied mainly on the alleged non-existence of the first stage dealer and did not conduct investigation at the hands of the transporter or the actual manufacturer/supplier to verify movement of goods. In the absence of such corroboration, and where the dealer was shown as a registered dealer during the relevant period, the burden to prove non-receipt of goods was not discharged by the Revenue.

Conclusion: Denial of Cenvat credit was not justified and the allegation of mere paper transactions failed.

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