Cenvat credit admissibility on supplementary invoices turns on whether short payment arose from fraud, suppression or misdeclaration.

Cenvat credit cannot be denied on a supplementary invoice unless the supplier's short payment is attributable to fraud, suppression, misdeclaration or similar culpable conduct under Rule 7(1)(b) of the Cenvat Credit Rules, 2001. Where the supplier's duty shortfall arose only from misclassification of the product, the disqualifying condition is not met. On that basis, credit remained admissible and the denial of credit could not be sustained.

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Issues: Whether Cenvat credit could be denied on the basis of a supplementary invoice where the supplier had short-paid duty only because of misclassification of the product and not because of fraud, suppression or misdeclaration.

Analysis: Rule 7(1)(b) of the Cenvat Credit Rules, 2001 restricts credit only when the short payment by the input supplier is attributable to fraud, suppression, misdeclaration or similar culpable conduct. On the facts found, the supplier's short payment arose from misclassification of the product and not from any such improper conduct. The condition for denying credit was therefore not satisfied.

Conclusion: Cenvat credit was admissible and the denial of credit could not be sustained.

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