Cenvat credit on duty-paid inputs cannot be denied merely because the supplier's process may not amount to manufacture.

Cenvat credit on bright bars cannot be denied to a recipient merely because the supplier's conversion of round bars into bright bars is alleged not to amount to manufacture, where duty has been paid on the inputs and the goods are received under valid duty-paying documents. The controlling factor is receipt of duty-paid inputs for use in or in relation to manufacture, not the independent taxability of the supplier's process. Where duty payment is undisputed and the documents are valid, credit remains available. The commentary also notes that this view is supported by earlier decisions rejecting denial of credit on the same ground.

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Issues: Whether Cenvat credit on bright bars could be denied to the recipient merely because the supplier's process of converting round bars into bright bars was alleged not to amount to manufacture, when duty had been paid on the inputs and the goods were received under valid documents.

Analysis: The credit was sought to be denied solely on the premise that the goods were not excisable at the supplier's end. The duty payment on the bright bars was not disputed, the goods were used in the manufacture of the final product, and there was no dispute regarding the validity of the duty-paying documents. The Tribunal noted that the crucial factor for credit is receipt of duty-paid inputs for use in or in relation to manufacture, and not whether the supplier's activity independently amounts to manufacture. The fact that the Department itself had treated the issue as contentious further supported the assessee's case. The Tribunal also relied on earlier decisions taking the same view that credit cannot be denied where duty paid on the input is evidenced by proper invoices.

Conclusion: The denial of Cenvat credit was unsustainable, and the assessee was entitled to credit on the duty paid bright bars.

Ratio Decidendi: Cenvat credit cannot be denied on duty-paid inputs received under valid documents for use in manufacture merely because the supplier's process is alleged not to amount to manufacture, so long as duty payment on the inputs is not in dispute.

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