Cenvat credit on non-received inputs upheld as unsustainable paper transactions and verified stock records supported the demand

Cenvat credit was held to be wrongly availed where factory verification, stock discrepancies, statutory records and statements of the managing director and employees showed that the disputed inputs were not physically received or actually consumed in manufacture, but were supported only by paper entries. The Tribunal noted that the remand directions had been complied with and that the assessee failed to rebut the departmental findings with convincing evidence. On that factual basis, the credit demand and consequential penalty were upheld as sustainable.

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Issues: Whether the assessee had wrongly availed Cenvat credit on inputs that were not received or not actually utilized in the manufacture of final products, and whether the demand and penalty were sustainable.

Analysis: The allegations were examined on the basis of factory verification, stock discrepancies, statements of the Managing Director and employees, and the statutory records. The Tribunal found that the records and statements consistently showed that the disputed aluminium profiles, channels, wire rods and sheets were not physically received or consumed in manufacture, while the entries in the relevant registers reflected only paper transactions. The earlier remand directions were held to have been complied with, and the assessee failed to produce convincing evidence to rebut the departmental findings.

Conclusion: The assessee had wrongly availed Cenvat credit on non-received and non-utilized inputs, and the demand and penalty were upheld against the assessee.

Ratio Decidendi: Where statutory records, corroborated statements, and factual verification establish that credit was taken on inputs not actually received or used in manufacture, the credit demand and consequential penalty are sustainable.

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