Cenvat credit on returned goods upheld where records proved receipt back into factory; related interest and penalty also failed.

Cenvat credit was found admissible where goods returned from a consignee or vendor were supported by the manufacturer's invoice or RCIA and the Department did not dispute receipt or duty-paid nature. A missing attested rejection note was treated as a technical defect because records otherwise showed despatch of rejected inputs for rectification and their receipt back in the factory. Credit on reworked goods was also allowed where records established return to the factory after an earlier reversal and re-availment. Once the credit was held admissible, the related interest and penalty could not survive, and the disallowance, interest, and penalty were set aside.

---

---

Issues: Whether Cenvat credit was admissible in respect of goods received back from a consignee or vendor on the strength of the manufacturer's invoice or RCIA, and whether interest and penalty could survive once the credit was held admissible.

Analysis: The credit of Rs. 12,528/- was denied only on the ground that the invoice was issued by the assessee itself, but the goods had come back into the factory accompanied by the duty-paid invoice and the Department did not dispute receipt of the goods or their duty-paid nature. The credit of Rs. 5,562/- was supported by records showing despatch of rejected inputs for rectification and subsequent receipt back in the factory; the absence of an attested copy of the rejection note was treated as a technical deficiency not affecting substantive admissibility. The credit of Rs. 15,464/- was similarly supported by records showing return of reworked goods to the factory, and the earlier reversal was followed by re-availment once receipt was established. Since the credit itself was found admissible, the basis for interest and penalty also ceased to survive.

Conclusion: The Cenvat credit was held admissible and the disallowance, interest, and penalty were set aside in favour of the assessee.

---