Cenvat credit and limitation: disclosed duty-paid goods and statutory records defeated denial and extended limitation.

Cenvat credit could not be denied merely because the goods were reflected in annexures to invoices, where corresponding duty-paid invoices, receipt of goods, and subsequent clearance were established; a mere apprehension of misuse by others was insufficient, so the denial was held unsustainable. The longer limitation period also could not be invoked because the credit was disclosed in RG-23D records and quarterly returns, with no material showing suppression, misstatement, or intent to evade duty; the dispute was treated as one of interpretation, so the demand was barred by limitation. The order confirming demand and penalty was set aside.

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Issues: (i) whether Cenvat credit could be denied merely because the goods were shown in annexures accompanying invoices and not in fresh invoices issued by the dealer, and (ii) whether the demand was barred by limitation in the absence of suppression or intent to evade duty.

Issue (i): whether Cenvat credit could be denied merely because the goods were shown in annexures accompanying invoices and not in fresh invoices issued by the dealer.

Analysis: The goods covered by the annexures were supported by the corresponding duty-paid invoices of the manufacturing units. The receipt of the goods, payment of duty, and subsequent clearance to customers were not in dispute. The mere possibility of misuse of annexures by some other person could not justify denial of credit when the duty-paid character of the goods and their receipt by the dealer stood established.

Conclusion: Credit could not be denied on that basis and the denial was not in accordance with law.

Issue (ii): whether the demand was barred by limitation in the absence of suppression or intent to evade duty.

Analysis: The credit availed was reflected in the RG-23D register and quarterly returns. On those facts, there was no material to infer wilful suppression, misstatement, or fraudulent intent. The dispute was at best one of interpretation of the credit rules, which did not justify invocation of the longer limitation period.

Conclusion: The demand was barred by limitation.

Final Conclusion: The order confirming the demand and penalty was set aside, and the appellant succeeded on both merits and limitation.

Ratio Decidendi: Where duty-paid goods and their receipt are established through accompanying invoices and records, credit cannot be denied on a mere apprehension of misuse of annexures; similarly, the extended limitation period cannot be invoked absent suppression or intent to evade when the transactions are disclosed in the statutory returns and records.

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