Cenvat credit on endorsed invoices denied after withdrawal of textile scheme; non-disclosure also justified extended limitation.

Rule 9 of the Cenvat Credit Rules, 2004 was treated as limiting credit to prescribed documents, so endorsed invoices were not valid support for Cenvat credit after the simplified textile scheme was withdrawn on 10.09.2004. A job worker, therefore, could not avail credit on endorsed invoices for the relevant period, and the denial of credit was upheld. On limitation, monthly returns did not disclose the endorsed invoices, the irregular credit was detected in audit, and there was no shown prior knowledge by the excise authorities. The extended period of limitation was accordingly held available, and the plea of time-bar failed.

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Issues: (i) Whether Cenvat credit could be availed on endorsed invoices after the withdrawal of the simplified textile scheme. (ii) Whether the demand was barred by limitation.

Issue (i): Whether Cenvat credit could be availed on endorsed invoices after the withdrawal of the simplified textile scheme.

Analysis: Rule 9 of the Cenvat Credit Rules, 2004 was treated as prescribing the documents on the basis of which credit could be taken, and endorsed invoices were held to be outside the permitted documents. The simplified textile scheme permitting credit through endorsed invoices had been withdrawn with effect from 10.09.2004. The appellant, being a job worker, was therefore not entitled to take credit on endorsed invoices for the relevant period.

Conclusion: The credit on endorsed invoices was rightly denied and the issue was decided against the assessee.

Issue (ii): Whether the demand was barred by limitation.

Analysis: The appellant had filed monthly returns, but there was no disclosure of the endorsed invoices to the department. The irregular availment was detected during audit verification, and the record did not show prior knowledge on the part of the excise authorities. On that basis, the extended period of limitation was held to be available.

Conclusion: The plea of limitation failed and the issue was decided against the assessee.

Final Conclusion: The denial of Cenvat credit and invocation of the extended limitation period were upheld, leaving the appeal unsuccessful.

Ratio Decidendi: After 10.09.2004, Cenvat credit could not be claimed on endorsed invoices by a job worker where the governing rules did not permit such documents for availing credit, and non-disclosure of the availment justified invocation of the extended period of limitation.

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