Cenvat credit and dealer penalty: valid manufacturer invoices and no registration requirement defeated the alleged contravention

Penalty was not leviable for issuing further Cenvat credit on goods received under a manufacturer's invoice, because that invoice was treated as a valid document for first stage dealer invoicing and no statutory requirement compelled the customer to obtain registration for the transaction. The Board circulars relied on in the earlier identical matter supported the same view, and the same legal basis led to penalty being set aside. The Revenue's challenge therefore failed, as no contravention attracting penalty was established on these facts.

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Issues: Whether penalty was leviable on the dealers for alleged contravention in issuing further Cenvat credit on goods received under invoices issued by the manufacturer, and whether the recipient customer was required to take registration for the transaction.

Analysis: The receipt of goods from the manufacturer under the manufacturer's invoice was treated as a valid document for issuance of first stage dealer invoices. The reasoning accepted that there was no statutory requirement that the customer in such a transaction must necessarily obtain registration. The conclusion was reinforced by the Board circulars relied upon in the earlier identical matter, where penalty had already been set aside on the same legal basis.

Conclusion: No contravention attracting penalty was made out, and the Revenue's challenge to the orders setting aside penalty failed.

Ratio Decidendi: Where goods are received under a valid manufacturer's invoice and the statutory scheme does not require the customer to be registered, further passing of credit does not by itself constitute a penal contravention.

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