Input classification by supplier's jurisdiction cannot be reopened to deny Modvat/Cenvat credit to the recipient.

Excise authorities assessing the recipient of inputs cannot reopen the classification adopted by the competent officer having jurisdiction over the supplier for the purpose of denying Modvat/Cenvat credit. The supplier's classification was treated as binding on the recipient's credit entitlement, so a reclassification at the recipient's end could not sustain disallowance of credit. On that basis, the disallowance and penalty were set aside in favour of the assessee.

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Issues: Whether the excise authorities having jurisdiction over the recipient of inputs can reopen the classification adopted by the officer having jurisdiction over the input supplier for the purpose of denying Modvat/Cenvat credit.

Analysis: The credit had been disallowed on the premise that the suppliers of the inputs should have classified the labels under a different tariff sub-heading attracting nil duty. The order applied the settled principle that the excise authorities assessing the recipient cannot revisit or alter the classification already adopted by the jurisdictional officer of the supplier. Following earlier Tribunal decisions, the classification made at the supplier's end was treated as binding for the recipient's credit entitlement.

Conclusion: The disallowance of credit could not be sustained on the basis of a reclassification at the recipient's end, and the issue was decided in favour of the assessee.

Final Conclusion: The common order of disallowance and penalty was set aside, and the appeals succeeded.

Ratio Decidendi: An excise authority assessing the recipient of inputs cannot reopen the classification adopted by the competent authority having jurisdiction over the supplier of those inputs.

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