Cenvat credit cannot be denied by reopening a supplier's duty payment when the supplier's assessment remains undisturbed.

Cenvat credit on inputs could not be denied merely because the supplier may have wrongly paid duty, where duty had in fact been paid and its incidence borne by the recipient. CESTAT held that the recipient's excise authorities cannot independently reopen the supplier's classification or question the supplier's duty payment unless that assessment has first been disturbed by the supplier's jurisdictional authority. The earlier ruling on wire drawing not amounting to manufacture was confined to that issue and did not govern credit eligibility in this context. The order allowing credit was sustained and the Revenue's challenge failed.

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Issues: Whether Cenvat credit can be denied to the recipient of inputs on the ground that the supplier may have wrongly paid duty and the receiving authority cannot reopen the supplier's classification and duty payment.

Analysis: The process of drawing wire from wire rods was held in another context not to amount to manufacture, but that ruling was confined to the question of manufacture and did not decide the availability of credit where duty had already been paid by the supplier. The deciding factor was that the supplier had paid duty on the goods and the recipient had borne its incidence. In such circumstances, the excise authorities at the recipient's end could not reopen the classification or question the duty payment made by the supplier when the supplier's jurisdictional authority had not set it aside.

Conclusion: Cenvat credit could not be denied to the respondent merely because the supplier may have paid duty wrongly; the appeal of Revenue failed.

Final Conclusion: The order allowing credit was sustained and the Revenue's challenge was rejected.

Ratio Decidendi: Where duty has been paid by the supplier on inputs and borne by the recipient, the recipient's jurisdictional authorities cannot deny Cenvat credit by independently reopening the supplier's classification or duty payment unless the supplier's assessment has first been disturbed.

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