Cenvat credit denied for paper invoices and no actual manufacturing or receipt of inputs

Cenvat credit was denied where inspection showed the premises were entirely occupied by another concern and no raw material, finished goods, labour, or machinery of the assessee were found. Statements on record, electricity consumption data, and inconsistencies in the claimed production, scrap sales, transport, and infrastructure supported the conclusion that there was no actual manufacturing activity by the assessee. Applying the preponderance of probability standard, the evidence established that the invoices were paper transactions without corresponding receipt or movement of inputs. The credit claim was therefore unsustainable and the denial of Cenvat credit was justified.

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Issues: Whether the assessee was entitled to retain Cenvat credit when the evidence indicated that the premises were used exclusively by another unit, no manufacturing activity of the assessee was found, and the invoices represented paper transactions without receipt of inputs.

Analysis: The premises were found to be wholly occupied by the other concern, with no stock of raw material, finished goods, labour, or machinery of the assessee present at the time of inspection. The statements on record and the electricity consumption data did not support the assessee's claim of manufacture. The records further showed inconsistencies in alleged production, scrap sales, transport arrangements, and infrastructure, while the Revenue's evidence pointed to non-receipt of inputs and absence of actual manufacturing activity. Applying the standard of preponderance of probability, the evidence was sufficient to establish that the assessee had issued or relied upon invoices without corresponding movement or receipt of goods.

Conclusion: The denial of Cenvat credit was justified and the assessee was not entitled to the credit claimed.

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