Cenvat credit entitlement upheld where duty-paid documentary correlation exists; therefore time barred demands cannot be sustained.

Cenvat credit on capital goods may be allowed where documentary correlation exists between duty-paid manufacturer supplies and dealer invoices and there is no evidence of suppression or mala fide conduct; on those facts the assessee is prima facie entitled to credit. Separately, demands raised after the statutory limitation period are barred; where the demand relates to credits availed in earlier periods and no concealment is shown, the demand must be set aside. Consequential relief to follow as per law.

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Issues: (i) Whether Cenvat credit availed on capital goods against proforma/dealer invoices (not duty-paying invoices in the assessee's name) can be denied under Rule 9 of the Cenvat Credit Rules, 2004; (ii) Whether the demand raised by issuance of the show cause notice on 25.02.2013 for credit availed in 2008-2009 and 2009-2010 is barred by limitation.

Issue (i): Whether Cenvat credit availed on capital goods against proforma/dealer invoices (not duty-paying invoices in the assessee's name) can be denied under Rule 9 of the Cenvat Credit Rules, 2004.

Analysis: There is a clear documentary correlation between the manufacturer and the dealer invoices and the goods received by the assessee, including matching engine and chassis numbers for the vehicles. The duty on the goods was paid by the manufacturer and the supplies to the assessee were through authorized dealers. The record shows the assessee recorded the credit in statutory returns and there is no evidence of suppression or mala fide conduct. These factual and documentary elements bear on the entitlement to credit under the statutory scheme governing Cenvat.

Conclusion: In favour of the assessee on merits; prima facie the assessee is entitled to Cenvat credit despite the invoices being in the dealer's name.

Issue (ii): Whether the demand raised by issuance of the show cause notice on 25.02.2013 for credit availed in 2008-2009 and 2009-2010 is barred by limitation.

Analysis: The credit in question was availed during 2008-2009 and 2009-2010 while the show cause notice was issued after the normal period on 25.02.2013. The adjudication shows part of the credit for similar goods was allowed previously. The assessee filed ST-3 returns regularly and the discrepancy was detected in audit of recorded returns, with no concealment or mala fide intention established. These factors indicate a bona fide belief in entitlement to credit and that the demand falls outside the period permitted by limitation rules.

Conclusion: In favour of the assessee; the demand is time-barred and cannot be sustained.

Final Conclusion: Although the substantive entitlement to credit on the facts is prima facie established in favour of the assessee, the appeal is allowed on the ground of limitation and the impugned demand is set aside; consequential relief, if any, to follow in accordance with law.

Ratio Decidendi: Where credit availed shows documentary correlation with duty-paid supplies and there is no suppression or mala fide conduct, the assessee is prima facie entitled to Cenvat credit; however, a demand raised beyond the statutory limitation period must be set aside notwithstanding the merits.

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