Cenvat credit on genuine invoices and extended limitation on absence of fraud or suppression

Cenvat credit on invoices issued by a registered manufacturer could not be denied merely because the supplier was later untraceable, where the invoices were genuine and there was no allegation that the assessee was party to fraud. The distinction between a forged document and a genuine document arising from a questionable transaction was recognised, and reasonable steps under the Cenvat Credit Rules were noted. The demand was also held time-barred because the extended limitation period was unavailable absent fraud, suppression, or positive evasion by the assessee. On that basis, the remand for fresh verification was unsustainable.

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Issues: (i) Whether Cenvat credit could be denied on the ground that the original manufacturer was later not traceable and the invoices were therefore treated as invalid. (ii) Whether the demand could be reopened by invoking the extended period of limitation and whether the Tribunal was justified in remanding the matter for fresh verification.

Issue (i): Whether Cenvat credit could be denied on the ground that the original manufacturer was later not traceable and the invoices were therefore treated as invalid.

Analysis: The credit was claimed on the strength of invoices issued by a manufacturer who was registered with the Central Excise department at the relevant time. The mere subsequent inability to trace that manufacturer did not make the invoices forged or non-existent. A distinction was drawn between a forged document and a genuine document obtained in a fraudulent transaction. Where the documents were genuine and there was no allegation that the assessee was party to any fraud, the credit could not be denied merely because the supplier was later not available. The requirement of taking reasonable steps under the Cenvat Credit Rules was noticed, but the present appeal was decided by following the earlier coordinate Bench view on the same set of issues.

Conclusion: Cenvat credit could not be denied solely because the supplier was later not traceable, and the issue was answered against the Revenue.

Issue (ii): Whether the demand could be reopened by invoking the extended period of limitation and whether the Tribunal was justified in remanding the matter for fresh verification.

Analysis: The demand was held to be hit by limitation because there was no allegation that the assessee had indulged in fraud or was party to suppression or positive evasion. In such circumstances, the extended period under the Central Excise law was not available. Since the claim was barred by limitation, the Tribunal ought not to have remanded the matter for further inquiry. The appeal was therefore disposed of by following the earlier decision on identical questions.

Conclusion: The extended period of limitation was not available, the remand was unsustainable, and the issue was answered against the Revenue.

Final Conclusion: The Tribunal's order was set aside and the appeal was allowed, with the Revenue's stand prevailing on the questions referred.

Ratio Decidendi: Cenvat credit taken on genuine invoices issued by a registered manufacturer cannot be denied merely because the supplier is subsequently untraceable, and the extended period of limitation is unavailable in the absence of fraud, suppression, or positive evasion by the assessee.

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