Cenvat credit on duty paid goods upheld where recipient could not reassess the supplier's classification to deny credit.

Cenvat credit remained admissible where the supplier had paid duty on the input goods under a bona fide classification, because the recipient's adjudicating authority could not reopen or reassess the supplier's classification to deny credit. The duty shown on the supplier's documents constituted duty paid for purposes of the credit rule, and the assessee was entitled to rely on those documents. The challenge to the credit therefore failed, and the credit availed by the assessee was left undisturbed.

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Issues: Whether Cenvat credit was admissible on duty paid by the supplier on the input goods on the basis of the supplier's classification, and whether the adjudicating authority of the recipient could reassess that classification while examining entitlement to credit.

Analysis: The disputed credit arose because the supplier had cleared the plush fabrics under a particular chapter heading and paid duty accordingly, while the department sought to treat the goods as falling under a different heading with a lower duty incidence. The controlling principle applied was that classification of the supplier's goods lies within the jurisdiction of the authority competent over the supplier, and the recipient's adjudicating authority cannot reopen that classification for the purpose of denying credit. Since the duty had in fact been paid by the supplier under a bona fide understanding of the applicable classification, the payment constituted duty paid within the meaning of the credit rule, and the assessee was entitled to rely on the documents evidencing such payment.

Conclusion: Cenvat credit was rightly availed by the assessee, and the challenge to the credit failed.

Final Conclusion: The appeal did not disclose any substantial question of law and was dismissed, leaving the credit allowed to the assessee undisturbed.

Ratio Decidendi: Credit is admissible on duty actually paid by the supplier in bona fide classification, and the recipient authority cannot reassess the supplier's classification to deny Cenvat credit.

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