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Issues: Whether CENVAT credit on inputs could be denied merely because it was not taken immediately on receipt of the inputs under Rule 4(1) of the CENVAT Credit Rules, 2004.
Analysis: Rule 4(1) permits credit to be taken immediately on receipt of inputs, but the word "immediately" was construed in the light of the Board circular and earlier Tribunal decisions to mean that credit may be taken at the earliest point of time after receipt and not that failure to do so on the very date of receipt destroys the entitlement itself. The Tribunal followed the view that the Rules do not prescribe any time limit for availment of credit and that delayed availment, by itself, does not prejudice the Revenue so long as the duty-paid inputs are received in the factory and used in or in relation to manufacture of dutiable final products.
Conclusion: Denial of CENVAT credit solely on the ground of delay in taking credit was unsustainable; the credit disallowance and consequential penalties were set aside in favour of the assessee.
Ratio Decidendi: A manufacturer cannot be denied CENVAT credit merely because it was not taken immediately on receipt of duty-paid inputs, where the rules do not prescribe a specific time limit for availment and the inputs are otherwise proved to have been received and used for dutiable manufacture.
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