Cenvat credit on cancelled invoices requires prescribed procedure and proper officer sanction before any suo motu claim.

Cenvat credit is available only on prescribed documents under the Cenvat Credit Rules, 2004, and a manufacturer could not claim credit suo motu on supplementary invoices that remained in customers' names after rejection. The prescribed cancellation procedure, including intimation to the Range Superintendent and forwarding of the original cancelled invoice, had not been followed, so the invoices did not become eligible documents for the assessee. The trade notice relied on was held inapplicable, and the view that suo motu credit or refund requires sanction of the proper officer was followed. Credit, interest, and penalty were therefore upheld.

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Issues: Whether the appellant was entitled to avail Cenvat credit on supplementary invoices issued in the name of the customers, and whether such credit could be taken suo motu without following the prescribed procedure for cancellation of invoices.

Analysis: Cenvat credit is available only on prescribed documents under the Cenvat Credit Rules, 2004. A supplementary invoice issued by a manufacturer can support credit in the hands of the recipient, but where the customers refused the invoices and returned them, the invoices did not become eligible documents for the manufacturer himself because they remained in the recipients' names. The prescribed procedure for cancellation required intimation to the Range Superintendent and forwarding of the original cancelled invoice, which was not followed. The trade notice relied upon by the appellant dealt with a different situation and had no application. The authorities and precedents relied upon by the appellant on suo motu credit were distinguished, and the Larger Bench view that suo motu credit or refund cannot be taken without sanction of the proper officer was followed.

Conclusion: The appellant was not entitled to take suo motu Cenvat credit on the impugned invoices, and the disallowance of credit, interest, and penalty was upheld.

Ratio Decidendi: Cenvat credit cannot be availed suo motu on invoices not constituting the assessee's eligible prescribed documents, and cancelled invoices must be dealt with only in the manner prescribed by the revenue procedure and under proper officer sanction.

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