Cenvat credit on duty-paid inputs cannot be denied on mere suspicion where invoices, statutory records and banking proof are in place.

Cenvat credit cannot be denied when duty-paid inputs are received under valid excise invoices, recorded in statutory registers and returns, and supported by banking payments and transport records. Rule 9(3) of the Cenvat Credit Rules, 2004 is satisfied where the recipient can identify the supplier through prescribed documents. Mere suspicion about the supplier's infrastructure is insufficient; absent cogent evidence that the goods were not received or that the transaction was fictitious, denial of credit and related penalty are unsustainable.

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Issues: Whether Cenvat credit could be denied and penalty sustained where the inputs were received under excise invoices, entered in statutory records, reflected in returns, and paid for by banking channels, despite the Revenue's allegation that the supplier lacked infrastructure.

Analysis: The inputs were reflected in RG-23A Part-I, Form-IV and ER-1 returns and were accepted in the assessee's records during departmental scrutiny. The invoices contained the supplier's particulars and the assessee had accounted for receipt of goods, paid through account payee cheques and RTGS, and produced transportation and purchase records. Rule 9(3) of the Cenvat Credit Rules, 2004 requires the recipient to identify the supplier through the prescribed documents, which stood satisfied. The Revenue relied mainly on statements from the supplier's side, but produced no material to show that the goods were not received or that the banking payments were returned. In the absence of evidence disproving receipt and use of inputs, credit could not be denied merely on suspicion about the supplier's infrastructure.

Conclusion: The denial of Cenvat credit and the associated penalty were unsustainable, and relief was due to the assessee.

Ratio Decidendi: Cenvat credit cannot be denied where duty-paid inputs are received under valid invoices and reflected in statutory records, unless the Revenue produces cogent evidence that the goods were not actually received or that the transaction was fictitious.

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