Cenvat credit on refinery setup goods allowed despite procedural lapses; interest still applies on reversed ineligible credit.

Cenvat credit was held allowable where duty-paid capital goods and allied materials were received and used in the factory for setting up plant and machinery, even though the goods moved through an EPC contractor, the appellant was shown as consignee, and the claim was supported by original or extra invoice copies. Failure to file an intimation or declaration with the jurisdictional Superintendent was treated as a procedural lapse that could not defeat substantive credit eligibility. Items used as components, spares, parts and insulation material for refinery setup were also treated as creditable. Interest remained payable on credit that had been taken and later reversed as ineligible.

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Issues: (i) Whether Cenvat credit on capital goods was admissible where the duty-paid goods were received in the appellant's factory through an EPC contractor and the appellant was shown as consignee; (ii) whether credit could be denied for non-filing of intimation or declaration to the jurisdictional Superintendent; (iii) whether credit was inadmissible merely because it was availed on original or extra copies of invoices; (iv) whether credit on items used as components, spares, parts, insulation material and allied goods for setting up the refinery was available under the Cenvat Credit Rules; (v) whether interest was payable on credit that had been reversed as ineligible.

Issue (i): Whether Cenvat credit on capital goods was admissible where the duty-paid goods were received in the appellant's factory through an EPC contractor and the appellant was shown as consignee.

Analysis: The duty-paying documents showed the appellant as consignee and the EPC contractor as the executing contractor. There was no dispute about receipt of the goods, their duty-paid character, or their use in setting up the refinery. Credit entitlement could not be negatived merely because the ownership stood in another name when the goods were admittedly received and used for the factory.

Conclusion: The credit was admissible and the denial was set aside in favour of the assessee.

Issue (ii): Whether credit could be denied for non-filing of intimation or declaration to the jurisdictional Superintendent.

Analysis: The dispute was only procedural. Since receipt and use of the goods were undisputed, failure to file the prescribed intimation could not defeat the substantive right to credit. Procedural conditions cannot override admissibility where the underlying duty-paid goods were received and used in the unit.

Conclusion: The credit could not be denied on this ground and the issue was decided in favour of the assessee.

Issue (iii): Whether credit was inadmissible merely because it was availed on original or extra copies of invoices.

Analysis: The only objection was to the form of the document. As the receipt and consumption of the goods and their duty-paid nature were not in dispute, the document-copy objection was insufficient to deny credit. The entitlement depended on the substantive facts, not on the particular copy used, in the absence of any dispute about genuineness.

Conclusion: The credit was admissible and the denial was set aside in favour of the assessee.

Issue (iv): Whether credit on items used as components, spares, parts, insulation material and allied goods for setting up the refinery was available under the Cenvat Credit Rules.

Analysis: The items were shown to be used in the refinery as components, spares, parts and allied materials for fabrication, installation and setting up of plant and machinery. The adjudication had rejected the claim summarily without meeting the usage explained by the appellant. Goods so used in relation to the plant and machinery for setting up the refinery were eligible for credit even if they did not fit a narrow view of capital goods.

Conclusion: The credit was allowable and the denial was set aside in favour of the assessee.

Issue (v): Whether interest was payable on credit that had been reversed as ineligible.

Analysis: The appellant had itself accepted ineligibility in respect of the reversed credit. Once credit is taken and later reversed, the liability to interest follows under the governing rule, irrespective of non-utilisation. The earlier reversal did not erase the interest consequence.

Conclusion: Interest was payable and the denial of that part of the demand failed, in favour of the Revenue.

Final Conclusion: The appeal succeeded on the substantive credit disputes and the penalty was set aside, but the demand of interest on the reversed ineligible credit was sustained.

Ratio Decidendi: Where duty-paid goods are admittedly received and used in the factory for setting up plant and machinery, Cenvat credit cannot be denied on technical or procedural lapses, and interest remains payable on credit that is taken and later reversed as ineligible.

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