Cenvat credit cannot be denied for a mere documentation lapse where duty-paid inputs were received and used in manufacture.

Duty-paid imported inputs received in the factory and used in manufacture cannot be disallowed for Cenvat credit merely because the bill of entry lacked Customs endorsement. The text treats the missing endorsement as a procedural lapse, not a substantive defect, because duty payment, receipt of inputs, and their use were all accepted. On that basis, denial of credit was unwarranted and penalty based on the same irregularity was not sustainable.

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Issues: Whether Cenvat credit could be denied and penalty imposed merely because the bill of entry was not endorsed by Customs officers, despite the imported inputs having suffered duty and having been received and used in the appellant's factory.

Analysis: The imported materials were not in dispute as duty paid, and their receipt in the appellant's premises along with the bill of entry was also accepted. The only defect was a procedural omission in obtaining the Customs endorsement. The omission was treated as a stray procedural failure, and denial of credit was held to be unwarranted where the substantive conditions of duty payment, receipt of inputs, and their use in manufacture stood satisfied. On the same reasoning, penalty based on the same irregularity was not sustainable.

Conclusion: Cenvat credit could not be denied on the basis of the procedural lapse, and the penalty was not justified.

Final Conclusion: The appeal succeeded and the assessee obtained the credit-related and penalty relief sought.

Ratio Decidendi: Where duty-paid inputs are received and used in manufacture, a mere procedural defect in documentation cannot by itself justify denial of Cenvat credit or imposition of penalty.

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