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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.
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