CENVAT credit on capital goods denied where duty-free clearance, suppression, and over-valuation undermined bona fide purchase claims.

CENVAT credit on capital goods was denied where the goods had been cleared by the manufacturer without payment of duty and duty was paid only later. The credit claim failed because the clearance involved suppression and misstatement, and the purchaser's own statement indicated a payment arrangement linked to settlement of outstanding dues, with over-valuation raising doubt about bona fide purchase. In these circumstances, credit could not be taken merely on the strength of invoices issued by a registered dealer. The limitation objection also failed on the facts, leaving the credit demand intact.

---

---

Issues: Whether CENVAT credit was admissible on capital goods purchased from a registered dealer when the goods had been cleared by the manufacturer without payment of duty and the transaction circumstances indicated knowledge of the irregularity.

Analysis: The capital goods were found to have been cleared by the manufacturer without duty, and the duty was paid only later. Credit on such goods was not allowable where the clearance involved suppression and misstatement by the manufacturer. The appellant's own statement showed that the payment arrangement was linked to settlement of outstanding dues, and the transaction was marked by over-valuation, which cast doubt on the claim of bona fide purchase. On these facts, the appellant could not claim credit merely on the strength of invoices issued by the registered dealer. The objection on limitation also failed in the facts of the case.

Conclusion: CENVAT credit was not admissible, and the appeal failed.

---