Cenvat credit cannot be denied solely because a supplier later becomes untraceable, while time-barred demands fail without suppression.

Cenvat credit was held admissible where services were received on the basis of invoices from registered providers and payment was made through banking channels, because later non-availability of the providers at their registered addresses did not by itself disprove receipt of services or justify denial of credit. The recipient was not required to ensure that the service provider had deposited tax, and the related interest and penalty could not survive. A demand raised after a long lapse was also held time-barred where the relevant figures had been disclosed in returns and no suppression with intent to evade was shown, although the late fee for delayed filing remained payable.

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Issues: (i) Whether Cenvat credit could be denied on the ground that the input service providers later appeared non-existent at their registered addresses and had not paid tax. (ii) Whether the demand was barred by limitation and whether the late fee was sustainable.

Issue (i): Whether Cenvat credit could be denied on the ground that the input service providers later appeared non-existent at their registered addresses and had not paid tax.

Analysis: The credit was taken on invoices issued by registered service providers and the payments were made through banking channels. The record did not establish that the appellant had not received the services. The fact that the providers were not found at their declared addresses during a later investigation did not, by itself, show that the services were never received. The omission of the earlier condition under the relevant credit rules also meant that the recipient was not required to ensure deposit of tax by the service provider. The factual matrix showed bona fide availment of credit on valid documents.

Conclusion: The disallowance of Cenvat credit was not sustainable, and the related interest and penalty could not survive.

Issue (ii): Whether the demand was barred by limitation and whether the late fee was sustainable.

Analysis: The notice was issued after a long lapse, while the relevant figures had already been disclosed in the returns and the department relied on those very documents for the demand. No suppression with intent to evade was established, so the extended period was unavailable. At the same time, the returns were filed beyond time, and the statutory late fee remained payable.

Conclusion: The demand was time-barred, but the late fee was correctly confirmed.

Final Conclusion: The appeal succeeded on the main tax demand and consequential levy, but failed to the limited extent of the late fee.

Ratio Decidendi: Cenvat credit cannot be denied merely because the supplier is later found unavailable at its registered address, where receipt of service and payment on valid invoices are established and the recipient is not shown to have acted with suppression or collusion.

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