Cenvat credit on capital goods remained admissible despite supplementary invoices where the transaction was bona fide.

Cenvat credit on capital goods was examined in the context of supplementary invoices issued by suppliers and an objection that such invoices were not valid documents. The analysis focused on Rule 7 of the Cenvat Credit Rules, 2002 and the effect of the departmental circular recognising that reversal proceedings should not be pursued where the transaction is bona fide. On that basis, the appellate order allowing credit was found free from infirmity, and the challenge to the demand, interest and penalty was held to have no merit.

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Issues: Whether Cenvat credit on capital goods could be denied merely because the credit was taken on the basis of supplementary invoices issued by the suppliers, and whether the demand, interest and penalty were sustainable.

Analysis: The dispute turned on the admissibility of credit under Rule 7 of the Cenvat Credit Rules, 2002 and the effect of the departmental objection that the invoice was not a valid document. The order under appeal had relied on the CBEC circular recognizing that reversal proceedings should not be pursued where the transaction is bona fide. No infirmity was found in the appellate order, and the revenue appeal disclosed no merit.

Conclusion: The credit was held admissible and the revenue's challenge failed.

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