Cenvat credit admissible after later duty payment, despite supplementary invoices and departmental insistence on excisability.

Cenvat credit was treated as admissible where duty on the goods had ultimately been paid pursuant to departmental insistence, even though the goods were initially cleared on the bona fide view that they were non-excisable. The Court reasoned that the substantive basis for credit existed once the duty component stood discharged, and credit could not be denied merely because payment was made later or because the invoices were supplementary in nature. The assessee was not to be prejudiced for the Department's stance where the duty amount had in fact been paid.

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Issues: Whether Cenvat credit was admissible when duty had been deposited later after the goods were treated as non-excisable, and whether credit could be denied for want of contemporaneous invoices or for the manner in which the duty payment and refund proceedings were handled.

Analysis: The assessee had cleared the goods on the bona fide footing that they were not excisable, but the departmental stand was ultimately not sustained and the assessee's entitlement to avoid penalty attained finality. Once the duty amount was deposited pursuant to the departmental insistence, the substantive basis for credit existed. The Court held that the manufacturer, having paid the duty, could not be denied the corresponding credit merely because the payment was made later or because the invoices were supplementary in nature. The assessee could not be made to suffer for the Department's insistence where the duty component had in fact been discharged.

Conclusion: The credit was admissible and the revenue's challenge failed.

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