CENVAT credit on fake invoices fails where inputs were not genuinely received and documentation showed collusion.

CENVAT credit is available only on receipt of duty-paid inputs supported by valid duty paying documents, and that entitlement fails where the alleged goods are not the declared inputs and the surrounding evidence shows fake documentation or collusion. The record indicated that the purported sandalwood oil was not genuinely received as claimed, with blank invoices, sealed containers, transport papers, official stamps and admitted dealings pointing to a non-genuine transaction. The documentary trail could not overcome the substantive finding that credit had been taken on non-existent or misdescribed inputs, so the credit claim was unsustainable and the connected demand, penalty and interest were upheld.

---

---

Issues: Whether the appellant was entitled to CENVAT credit on the strength of invoices when the alleged inputs were found not to be the declared goods and the transaction was tainted by fake documentation and collusion.

Analysis: Eligibility to credit under the CENVAT scheme depends upon receipt of duty-paid inputs supported by valid duty paying documents. The record showed that the goods purportedly supplied as sandalwood oil were, in substance, not the declared inputs, and the surrounding materials indicated a coordinated arrangement involving sealed containers, transport documents, blank invoices, official rubber stamps, and admitted dealings with the supplier. The appellant's own statement, read with the surrounding circumstances, did not displace the conclusion that the credit was taken on non-genuine inputs. The documentary trail relied upon by the appellant could not override the substantive finding that the inputs on which credit was availed were not actually received as claimed.

Conclusion: The appellant was not entitled to the disputed CENVAT credit and the demand, penalty, and interest were sustainable.

---