Cenvat credit cannot be denied for reasonable delayed availment or on a new ground absent from the show cause notice.

Cenvat credit was allowed where the only delayed component was additional customs duty and the assessee plausibly explained the delay by SAP system non-availability; on the facts, the delay was treated as reasonable and not a ground to deny credit. The adjudication also could not sustain denial on Notification No. 102/2007-Customs because that basis was not set out in the show cause notice, and a new ground could not be introduced at that stage. The order denying credit beyond the one-year period was set aside, and relief was granted to the assessee.

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Issues: (i) Whether Cenvat credit of additional customs duty could be denied for being taken belatedly when the delay was explained by failure of the assessee's SAP system. (ii) Whether the demand could be sustained on the basis of Notification No. 102/2007-Customs when that ground was not proposed in the show cause notice.

Issue (i): Whether Cenvat credit of additional customs duty could be denied for being taken belatedly when the delay was explained by failure of the assessee's SAP system.

Analysis: The imported inputs were received and used, and credit on other admissible duties reflected in the bills of entry had been taken promptly. The only component not credited immediately was the 4% additional customs duty, and the explanation that the SAP system was not fully operational during the relevant period was accepted as plausible. On the facts, the delay was not treated as inordinate or as disclosing any negligence, and at any rate it was held to fall within a reasonable period.

Conclusion: The denial of Cenvat credit on the ground of delayed availment was not justified, and the assessee succeeded on this issue.

Issue (ii): Whether the demand could be sustained on the basis of Notification No. 102/2007-Customs when that ground was not proposed in the show cause notice.

Analysis: The show cause notice proceeded only on the alleged belated availment of credit after receipt of goods. The adjudication order, however, introduced an additional ground based on non-compliance with Notification No. 102/2007-Customs. A new basis of denial not contained in the notice could not validly be introduced at the adjudication stage.

Conclusion: The additional ground based on Notification No. 102/2007-Customs was impermissible, and the assessee succeeded on this issue as well.

Final Conclusion: The order denying credit beyond the one-year period was set aside, and the assessee obtained relief to that extent.

Ratio Decidendi: Credit cannot be denied where the delay in availing it is satisfactorily explained and is reasonable on the facts, and adjudication cannot rest on a new ground not alleged in the show cause notice.

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