Capital goods credit upheld where bill of entry was produced, limitation failed, and job-work use did not bar eligibility.

Credit on imported capital goods was held admissible where the bill of entry had been produced when credit was taken, and later non-availability of the triplicate copy did not by itself disprove compliance. In the absence of evidence of suppression or misstatement, the extended period of limitation was not available to the Revenue. Credit was also upheld on capital goods used for job work because the record did not show exclusive use for exempted manufacture, the output was treated as dutiable in the customer's hands, and the assessee had disclosed the activity. After reversal of the credit on shifting the machines, no demand survived.

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Issues: (i) Whether credit on imported capital goods was admissible despite the subsequent unavailability of the triplicate copy of the bill of entry and the Revenue's plea against invocation of the extended period of limitation; (ii) Whether credit on the capital goods was inadmissible because the goods were used in job work and not in the manufacture of dutiable final products, and whether any demand survived after reversal of credit on shifting the machines.

Issue (i): Whether credit on imported capital goods was admissible despite the subsequent unavailability of the triplicate copy of the bill of entry and the Revenue's plea against invocation of the extended period of limitation.

Analysis: The credit was taken on imported capital goods on which CVD had been paid. The triplicate copy of the bill of entry was found to have been produced at the time of availing credit, and the later non-availability of that copy did not establish that the document was absent when credit was taken. The installation certificate issued after verification of the bill of entry and the finalisation of assessments supported the assessee's case. In the absence of material showing suppression or misstatement, the statutory conditions for the extended period were not satisfied.

Conclusion: Credit could not be denied on this ground, and the extended period was not invocable.

Issue (ii): Whether credit on the capital goods was inadmissible because the goods were used in job work and not in the manufacture of dutiable final products, and whether any demand survived after reversal of credit on shifting the machines.

Analysis: The machinery was used for job work operations, and the record did not establish exclusive use in the manufacture of exempted goods. The goods produced were treated as dutiable in the hands of the customer, and the assessee had disclosed the activity in its returns. Further, the machines were later shifted after reversal of the entire credit taken. On these facts, the condition for denial of credit on capital goods exclusively used for exempted manufacture was not made out, and nothing survived for recovery after reversal.

Conclusion: The credit was admissible on merits and no demand survived.

Final Conclusion: The appeal failed on merits and on limitation, and the assessee's credit entitlement was upheld.

Ratio Decidendi: Credit on capital goods cannot be denied where the bill of entry was produced when credit was taken, no suppression is shown for invoking the extended period, and the machinery is not established to have been used exclusively for exempted manufacture, especially where the credit is later reversed.

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