Cenvat credit cannot be denied for minor procedural lapses where eligibility exists and there is no misuse.

Cenvat credit was treated as admissible despite procedural objections where the credit related to services used by different units and could have been routed through the Input Service Distributor mechanism. The Tribunal viewed the issue as one of procedure rather than misuse of ineligible credit, noting that the credit was taken at one location and there was no material showing improper utilisation. It applied the principle that a substantive input credit benefit should not be denied for minor procedural defects, and held the denial of credit, along with the related demand, interest and penalty, unsustainable.

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Issues: Whether denial of cenvat credit and the consequential demand, interest and penalty were sustainable when the credit was taken in respect of services used by different units of the assessee and the dispute was essentially procedural.

Analysis: The Tribunal followed the earlier decision in the assessee's own case on the same issue and noted that, where credit could have been distributed through the Input Service Distributor mechanism, the matter was one of procedure and not of misuse of ineligible credit. It further accepted that the credit was taken at one location and there was no material misuse, and that a substantial benefit like modvat or cenvat credit should not be denied for minor procedural defects.

Conclusion: The denial of cenvat credit was unsustainable and the impugned order was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the demand, interest and penalty did not survive.

Ratio Decidendi: Cenvat credit cannot be denied merely for minor procedural lapses where the credit is otherwise eligible and there is no misuse or ineligible utilisation.

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