Cenvat credit on duty-paid import cannot be denied for document discrepancies absent proof goods were outside the same consignment.

Cenvat credit on duty-paid Indigo Powder was held admissible where the department could not establish that the disputed balance stock was outside the same imported consignment or that the input was not used in manufacture. Documentary discrepancies in labels and records were found insufficient to deny credit when the goods formed part of a single duty-paid import. The PLA amount debited under protest, being linked to an unsustainable credit denial, was treated as refundable in principle, but the refund claim required fresh examination by the original authority under the statutory refund conditions after hearing the claimant.

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Issues: (i) Whether Cenvat credit of the CVD paid on the entire consignment of Indigo Powder was admissible when the department disputed that the balance stock belonged to the Bill of Entry. (ii) Whether the amount debited in the PLA under protest was refundable and the refund claim had to be reconsidered on remand.

Issue (i): Whether Cenvat credit of the CVD paid on the entire consignment of Indigo Powder was admissible when the department disputed that the balance stock belonged to the Bill of Entry.

Analysis: The dispute turned on whether the goods found in stock were different from the goods covered by the Bill of Entry. The department's allegation was limited to the proposition that the balance quantity of 9700 kg did not belong to the Bill of Entry, while it was not the department's case that the 4300 kg already consumed from the same consignment did not so belong. The goods were duty-paid, and there was no case that the input was not used in manufacture. On that basis, the alleged discrepancy in labels and documents was held insufficient to deny credit when the entire quantity formed part of the same imported consignment.

Conclusion: Cenvat credit on the entire 14,000 kg consignment was admissible, and the denial of credit was unsustainable.

Issue (ii): Whether the amount debited in the PLA under protest was refundable and the refund claim had to be reconsidered on remand.

Analysis: Once the credit denial was held to be unjustified, the PLA debit made at the instance of the department and under protest could not be retained as a valid discharge of liability. The refund claim, however, still required consideration of the statutory conditions governing refund and had to be examined by the original authority after hearing the claimant.

Conclusion: The appellant was entitled to seek refund, and the refund claim was remanded for fresh decision in accordance with law.

Final Conclusion: The credit demand was set aside, and the refund matter was sent back for fresh adjudication after due opportunity of hearing.

Ratio Decidendi: Where the goods covered by a single import consignment are duty-paid and used as input in manufacture, credit cannot be denied merely on documentary discrepancies unless the department establishes that the disputed quantity is outside the imported consignment.

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