CENVAT credit entitlement remanded for fresh consideration after conflicting findings and doubt over duty-paid character of goods.

CENVAT credit entitlement turned on whether the invoiced goods retained duty-paid character, but the record was considered insufficient because proceedings against the sister concern had resulted in confirmation of duty demand and penalty. The first appellate authority's reasoning was found internally inconsistent, as it criticised the respondent's conduct yet still set aside the demand. In view of these contradictory findings and the need for fuller material, the matter was remanded to the Commissioner (Appeals) for fresh consideration after both sides were allowed to produce documents and be heard. The order granting relief to the respondent was not affirmed.

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Issues: Whether the order allowing CENVAT credit required interference and remand for fresh consideration in view of the sister concern's alleged non-payment of duty and the contradictory findings recorded by the first appellate authority.

Analysis: The availability of credit depended on whether the goods covered by the invoices had the duty-paid character. The proceedings against the sister concern had resulted in confirmation of duty demand and penalty, and that circumstance created doubt about the basis on which credit was taken. The appellate authority's reasoning was also found to be internally inconsistent, as it both criticised the respondent's conduct and yet set aside the demand. In these circumstances, the existing record was held insufficient for a final merits determination, and the matter was sent back for reconsideration after allowing both sides to place documents and be heard.

Conclusion: The matter was remanded to the Commissioner (Appeals) for a fresh decision; the order granting relief to the respondent did not stand affirmed.

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