Cenvat credit on bogus supplier invoices denied, with extended limitation and equal penalty upheld for deliberate misuse.

Cenvat credit was denied on invoices issued by bogus or non-existent suppliers because the assessee failed to take reasonable steps to verify the supplier's identity, address and the genuineness of the duty-paid documents. The records showed irregular invoices and delivery documents, including vague descriptions, common addresses and missing transport details, supporting the finding that the documents were not genuine and that credit was knowingly taken on suspect invoices. The same conduct justified invocation of the extended period of limitation and equal penalty, as the facts disclosed positive action and deliberate misuse. The objection based on non-supply of relied-upon documents was rejected.

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Issues: Whether the appellant was entitled to Cenvat credit on invoices issued by bogus or non-existent suppliers and whether the extended period of limitation and equal penalty were rightly invoked.

Analysis: The credit was taken on grey fabric invoices issued by suppliers later found to be fake or non-existent, and the Tribunal noted multiple irregularities in the invoices and delivery documents, including abnormal values, vague descriptions, common addresses, and absent transport details. Relying on the settled interpretation of Rule 7(2) of the Cenvat Credit Rules, 2002, the Tribunal held that the credit taker must take all reasonable steps to verify the identity and address of the supplier and the duty-paid nature of the goods. The evidence showed that such precautions were not taken and that the appellant had taken credit knowing the documents were not genuine. The Tribunal also held that the facts disclosed positive action sufficient to justify invocation of the extended period and consequential penalty under the Central Excise Act and the Cenvat Credit Rules. The objection based on non-supply of relied-upon documents was rejected.

Conclusion: The appellant was not entitled to the Cenvat credit, the extended period of limitation was validly invoked, and the equal penalty was justified.

Ratio Decidendi: Cenvat credit cannot be sustained on invoices issued by bogus or non-existent suppliers unless the assessee has taken all reasonable steps to verify the supplier's identity and the genuineness of the duty-paid documents, and deliberate use of such documents supports invocation of the extended period and penalty.

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