Cenvat credit taken later on original invoices did not justify refund denial in a revenue-neutral situation.

Refund could not be denied merely because Cenvat credit on inputs was taken later on the strength of original invoices. The Cenvat Credit Rules, 2004 prescribed no time limit for availing such credit, and the invoices had been detained by the VAT department at the time of receipt of inputs. Since the credit was lawfully availed once the original invoices were received, and duty had meanwhile been paid through PLA, the situation was revenue neutral. On that basis, rejection of the refund claim was unsustainable and the appeal was allowed.

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Issues: Whether refund could be denied on the ground that Cenvat credit was not availed at the time of receipt of inputs and was taken later on the strength of original invoices.

Analysis: The appellant had not received the original invoices at the time of procurement of inputs because they were detained by the VAT department. The Cenvat Credit Rules, 2004 did not prescribe any time limit for availing credit on inputs, and credit could be taken on receipt of the original invoices. The appellant later availed the credit on the strength of those invoices. In these circumstances, the payment of duty through PLA in the interim and the subsequent availment of credit showed that the situation was revenue neutral, and the refund claim could not be rejected on the ground taken in the impugned order.

Conclusion: The denial of refund was unsustainable and the appeal was allowed.

Ratio Decidendi: Where Cenvat credit is lawfully availed later on receipt of original invoices and no statutory time limit bars such availment, rejection of refund on the ground of delayed credit is not warranted, especially in a revenue-neutral situation.

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