CENVAT Credit on Leased Capital Goods upheld despite endorsed invoices where receipt and factory use were undisputed.

CENVAT credit could not be denied merely because the capital goods invoices were endorsed in the lessor's name where the goods were actually received, installed and used by the lessee in its factory under a lease arrangement. Since the factual receipt and use of the capital goods for manufacture of dutiable final products were undisputed, the endorsement on the invoices did not defeat the credit entitlement. The denial of credit on that basis was therefore unsustainable, and the lessee remained entitled to CENVAT credit.

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Issues: Whether CENVAT credit could be denied merely because the invoices stood endorsed in the name of the lessor, when the capital goods were received, installed and used in the lessee's factory under a lease arrangement.

Analysis: The capital goods were admittedly received by the appellant, duly erected and installed in its premises, and used for manufacture of dutiable final products. The dispute was only that the original invoices were in the name of the lessor and were endorsed to record transfer under the lease agreement. The denial of credit on this ground was unsustainable because the transaction was not a sale between independent units but a transfer of capital goods for use in the appellant's factory under the lease arrangement. In such circumstances, the endorsement on the invoices did not destroy the entitlement to credit, particularly when the factual receipt and use of the goods were not in dispute.

Conclusion: The appellant was entitled to the CENVAT credit, and denial of credit on the basis of endorsed invoices was not justified.

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