Cenvat credit on second stage dealer invoices upheld where CBEC circulars permitted credit through an intermediary

Cenvat credit could not be denied merely because the invoices were issued by a second stage dealer where CBEC circulars recognised credit on such documents. The goods were supplied by the manufacturer to an intermediary who only consigned them onward, and the registered dealer later issued the invoice used for credit. On these facts, the circulars supported acceptance of the documents and the Revenue's objection failed, so the assessee's Cenvat credit claim was upheld.

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Issues: Whether Cenvat credit could be denied merely because the documents were issued by a second stage dealer, in the light of the Board circulars governing such credit.

Analysis: The controversy turned on the effect of the CBEC circulars clarifying that credit would not be denied where goods were consigned through an unregistered intermediary and the ultimate registered dealer issued the second stage documents. The factual position showed that the manufacturer supplied the goods to an intermediary, who merely consigned them onward, and the registered dealer thereafter issued the invoice relied upon for credit. On that basis, the circulars supported acceptance of the documents and the Revenue's objection was not sustainable.

Conclusion: Cenvat credit was admissible, and the assessee's claim was upheld.

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