Cenvat credit cannot be disallowed in refund proceedings without a show cause notice under the recovery rules.

Cenvat credit eligibility cannot be disputed in refund proceedings unless a show cause notice is issued under Rule 14 of the Cenvat Credit Rules, 2004 read with the governing demand and recovery provisions. The Tribunal treated the point as covered by an earlier Division Bench decision and held that, in the absence of such notice, disallowance of credit was not sustainable. The text records that the assessee's appeals were allowed on that basis.

---

---

Issues: Whether Cenvat credit taken by the assessee could be disallowed in refund proceedings without issuance of a show cause notice under the Cenvat Credit Rules, 2004 read with the Finance Act and the Central Excise Act.

Analysis: The issue was held to be covered by an earlier Division Bench decision of the Tribunal. It was found that the eligibility to Cenvat credit cannot be challenged in refund proceedings unless a show cause notice is issued under Rule 14 of the Cenvat Credit Rules, 2004 read with the statutory provisions governing demand and recovery. In the absence of any such notice, disallowance of credit was not sustainable.

Conclusion: The disallowance of Cenvat credit without issuance of a show cause notice was invalid and the assessee's appeals were allowed.

---