Cenvat credit and limitation: direct dispatch for fitment did not defeat credit, and absence of suppression barred extended demand.

Cenvat credit could not be denied merely because brake assemblies were sent directly from the supplier to another unit for fitment before reaching the assessee's factory, since the goods were ultimately received and used in manufacture. The absence of initial physical receipt in the factory did not defeat credit. On limitation, the extended period was unavailable because the record did not show suppression of facts or intent to evade duty. The demand was therefore time-barred, and the disallowance of credit and penalty was unsustainable.

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Issues: (i) Whether Cenvat credit could be denied merely because the brake assemblies were sent directly from the supplier to another unit for fitment and were not first physically received in the assessee's factory. (ii) Whether the demand was barred by limitation for want of suppression or intent to evade duty.

Issue (i): Whether Cenvat credit could be denied merely because the brake assemblies were sent directly from the supplier to another unit for fitment and were not first physically received in the assessee's factory.

Analysis: The assessee had purchased the brake assemblies and the only departure from the normal route was that, to avoid unnecessary transportation, the goods were sent directly to the other unit for fitment with axles and were thereafter received in the assessee's factory for use in manufacture. Since the goods were ultimately received and used in the manufacture of finished goods, the mere absence of initial physical receipt in the assessee's factory did not justify denial of credit.

Conclusion: Cenvat credit could not be denied on this ground and the finding was in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation for want of suppression or intent to evade duty.

Analysis: The record did not indicate any intention on the part of the assessee to evade duty by availing credit. In the absence of such material, the longer period of limitation was not available to the department.

Conclusion: The demand was time-barred and the finding was in favour of the assessee.

Final Conclusion: The order disallowing the credit and imposing penalty was not sustainable, and the Revenue's appeal failed.

Ratio Decidendi: Cenvat credit cannot be denied where goods are ultimately received and used in manufacture despite direct dispatch for convenience, and the extended limitation period is unavailable absent suppression of facts or intent to evade duty.

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