Bona fide receipt of inputs protects Cenvat credit when Revenue cannot rebut actual procurement or use.

Cenvat credit cannot be denied to a buyer who received inputs under duty-paid invoices from a registered supplier merely because the supplier is later alleged to have issued bogus invoices, where the transaction is shown to be bona fide. The decisive factors were receipt of inputs, payment through banking channels, use of the inputs through a job worker, and the absence of evidence from the Revenue to show an alternative procurement source or to rebut actual receipt and use. A CBEC circular was also relied on to state that credit need not be reversed when the consignee's bona fides are not in dispute.

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Issues: Whether Cenvat credit can be denied to a buyer who received inputs against duty-paid invoices from a registered supplier later alleged to have issued bogus invoices without actual manufacture or removal of goods.

Analysis: The dispute turned on whether the respondent had acted bona fide and discharged the onus of proving receipt of inputs and genuineness of the transaction. The supplier was registered under central excise, the purchases were made through banking channels, and the record showed that the respondent had procured inputs for use in manufacture through its job worker. The Revenue did not produce evidence to show any alternative source of procurement or to rebut the respondent's claim of receipt and use of the inputs. In these circumstances, the finding of the Commissioner (Appeals) that the transaction was bona fide was accepted, and the departmental appeal was found to rest on bald assertions and a repetition of the show cause notice. Reliance was also placed on the CBEC circular stating that credit need not be reversed against a consignee where bona fide nature of the transaction is not in dispute.

Conclusion: Cenvat credit could not be denied to the respondent, and the Revenue's challenge failed.

Final Conclusion: The order allowing the credit was sustained, the Revenue's appeal was rejected, and the respondent remained entitled to consequential relief in accordance with law.

Ratio Decidendi: Where a consignee receives goods against invoices from a registered supplier and the transaction is shown to be bona fide, Cenvat credit cannot be denied merely because the supplier is later alleged to have indulged in issuing bogus invoices, unless the Revenue discharges its burden by adducing evidence to rebut receipt and use of the inputs.

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