Cenvat credit cannot be denied for formal defects where duty-paid inputs and manufacturing use are supported by the record.

Cenvat credit on countervailing duty paid inputs cannot be denied merely because the transaction records are incomplete or the units were unregistered, where the record otherwise shows that duty was actually suffered and the imported input was received and used in manufacture. The Delhi HC distinguished cases involving only technical non-compliance and held that formal defects cannot override substantive evidence supporting credit. On the facts, the proprietor's control over the connected concerns and the documentary trail for the imported PVC resin were sufficient to support credit to the extent shown on record, and the denial was set aside.

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Issues: Whether Cenvat credit could be denied to the assessee in respect of countervailing duty paid inputs on the ground that the transaction lacked complete documentation and the units were unregistered at the relevant time.

Analysis: The assessee's entitlement turned on whether the input duty had in fact been suffered and whether the material on record supported the receipt and use of the imported PVC resin. The record showed that the same proprietor controlled the connected concerns and that the imported resin was used in the manufacture of the finished product. The Court distinguished cases where credit was denied for mere technical non-compliance and held that the existence of relevant payment material could not be ignored merely because other parts of the transaction were unaccounted. Where permissible credit is otherwise supported by the record, denial only on a formalistic approach is not justified.

Conclusion: The assessee was entitled to Cenvat credit to the extent supported by the documents on record, and the denial of credit was set aside.

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