Cenvat credit on supplementary invoices upheld where no suppression by manufacturer was established and duty payment supported credit entitlement.

Cenvat credit on supplementary invoices issued by a manufacturer to its sister unit could not be denied where the surrounding facts did not establish suppression or any intent to evade duty. The duty paid by the manufacturer was available as credit to the recipient sister concern, leaving no commercial incentive to undervalue the goods. Identical supplementary invoices had been accepted in other proceedings, and no suppression proceedings were initiated against the manufacturer. On that basis, the invoices were treated as valid for credit under the Cenvat Credit Rules, 2004, the denial of credit was held unsustainable, and the assessee succeeded.

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Issues: Whether Cenvat credit could be denied on supplementary invoices issued by the manufacturer to its sister unit on the ground of alleged suppression leading to invalidity of the invoices under Rule 7(1)(b) of the Cenvat Credit Rules, 2004.

Analysis: The duty paid by the manufacturing unit was available as credit to the recipient sister unit, so there was no commercial incentive to undervalue the goods or evade duty. Identical supplementary invoices had been accepted in proceedings concerning other sister concerns, and no proceedings had been initiated against the manufacturer for suppression. The higher duty was paid after the valuation issue was pointed out, and the surrounding circumstances supported the view that the invoices were not the result of suppression so as to disqualify credit.

Conclusion: Cenvat credit on the supplementary invoices could not be denied; the impugned order was set aside and the appeals were allowed in favour of the assessee.

Final Conclusion: The denial of credit was unsustainable because the supplementary invoices were not vitiated by suppression and the recipient was entitled to take credit of the duty paid thereunder.

Ratio Decidendi: Where duty-paid clearances are made to a sister concern and the surrounding facts do not establish suppression by the manufacturer, supplementary invoices remain valid for credit and denial of Cenvat credit is not justified.

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