Cenvat credit cannot be denied where supplier suppression is not established and no intent to evade duty is shown.

Cenvat credit could not be denied merely because the supplier paid duty only after detection by excise authorities. The settlement authority had granted immunity from penalty after considering the facts, including the unsettled brand-name issue, which supported the absence of intent to evade duty. On that basis, the supplier was not treated as guilty of suppression, and credit taken on the strength of the supplier's invoices remained valid. The disallowance of credit and the related penalty were therefore set aside.

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Issues: Whether Cenvat credit could be denied on the ground that the supplier paid duty only after detection by the excise authorities and was alleged to have suppressed facts.

Analysis: The supplier had approached the Settlement Commission, which granted immunity from penalty after considering the facts and circumstances, including that the brand-name issue was not settled during the dispute period. This finding supported the conclusion that there was no intention to evade duty. In that situation, the supplier could not be treated as guilty of suppression so as to deprive the assessee of credit taken on the strength of the supplier's invoices.

Conclusion: The disallowance of Cenvat credit was not sustainable and the assessee succeeded.

Final Conclusion: The order disallowing credit and imposing penalty was set aside, and the appeal was allowed.

Ratio Decidendi: Cenvat credit cannot be denied merely because the supplier's duty payment followed detection, where the competent settlement authority has accepted the absence of intent to evade duty and no suppression is attributable to the supplier.

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