CENVAT credit cannot be denied merely because the invoice supplier allegedly did not manufacture the goods when duty was paid.

CENVAT credit under Rule 7 of the CENVAT Credit Rules, 2002 may be taken on the basis of a manufacturer's invoice where the recipient has made reasonable verification under Rule 9(3) that the excise duty shown in the document was paid. Where the duty noted in the invoice had in fact been paid, receipt of the capital goods was undisputed, and there was no evidence of excess credit or of goods outside duty-paid documents, credit could not be denied merely because the invoice-issuing supplier was alleged not to have manufactured the goods. The alleged absence of manufacture, by itself, was insufficient to defeat credit in those facts.

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Issues: Whether CENVAT credit can be denied merely because the invoice was issued by a manufacturer who was alleged not to have manufactured the goods, when the duty shown in the invoice stood paid and the capital goods were received by the assessee.

Analysis: The credit scheme under Rule 7 of the CENVAT Credit Rules, 2002 permits credit on the basis of a manufacturer's invoice, and Rule 9(3) requires the recipient to take reasonable steps to ensure that the duty of excise indicated in the accompanying documents has been paid. The recorded facts showed that the duty mentioned in the invoice had in fact been paid, the receipt of the capital goods was not in dispute, and there was no evidence that the assessee had availed excess credit or that the goods were not covered by duty-paid documents. The alleged lack of manufacture by the invoice-issuing supplier did not, by itself, defeat entitlement to credit in these circumstances.

Conclusion: CENVAT credit could not be denied on the sole ground that the invoice-issuing manufacturer was alleged not to have manufactured the goods, so long as duty was paid and the goods were received under duty-paying documents.

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