CENVAT credit cannot be denied for a clerical invoice correction after amalgamation when inputs were duly received and used.

CENVAT credit was treated as admissible where inputs were received, accounted for and used in manufacture, and the invoice name alteration after amalgamation was regarded as a clerical correction rather than an attempt to take inadmissible credit. On that basis, the demand for reversal of credit failed. Interest was also held unsustainable because it depended on the premise of wrongful availment, which was not established. Penalty under the extended recovery and penal provisions likewise could not survive in the absence of fraud, suppression, wilful misstatement or intent to evade duty, though the separate unchallenged penalty under the Central Excise Rules remained intact.

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Issues: (i) Whether CENVAT credit could be denied merely because the name in certain invoices was altered by the store clerk after amalgamation and before fresh registration was issued; (ii) Whether interest was payable once the credit was held to be admissible; (iii) Whether penalty under the extended limitation provisions and under the Central Excise Rules could be sustained.

Issue (i): Whether CENVAT credit could be denied merely because the name in certain invoices was altered by the store clerk after amalgamation and before fresh registration was issued?

Analysis: The inputs were admittedly received, accounted for and used in manufacture. The merger had already taken effect, and the correction in the invoices was made only out of anxiety to avoid loss of credit. The alteration was treated as a clerical mistake, not as a device to obtain inadmissible credit. In these circumstances, denial of the entire credit was held to be unwarranted.

Conclusion: The CENVAT credit was admissible and its denial was not sustainable.

Issue (ii): Whether interest was payable once the credit was held to be admissible?

Analysis: Interest was linked to the premise that credit had been wrongly taken. Once the credit itself was found admissible and the demand of credit failed, the foundation for interest also disappeared.

Conclusion: The demand for interest was not sustainable.

Issue (iii): Whether penalty under the extended limitation provisions and under the Central Excise Rules could be sustained?

Analysis: Penalty under the extended recovery and penal provisions was considered applicable only where wrongful availment of credit was established with the requisite elements of fraud, suppression, wilful misstatement or contravention with intent to evade duty. As the credit claim itself was upheld and the incident was treated as a mistake, penalty under Section 11AC and the corresponding recovery provisions could not survive. The separate penalty imposed under the Central Excise Rules was not challenged and therefore remained undisturbed.

Conclusion: The penalty of Rs. 50,000/- and the related penal demand were not sustainable, while the separate penalty of Rs. 10,000/- remained unaffected.

Final Conclusion: The appeal succeeded to the extent of setting aside the denial of credit, the interest demand, and the reduced penalty, but the unchallenged separate penalty was left intact.

Ratio Decidendi: Where credit is otherwise admissible and the discrepancy in invoices is only a clerical or inadvertent mistake without fraudulent intent, the demand of credit, interest, and penalty based on wrongful availment cannot be sustained.

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