CENVAT credit on duty-paid inputs remains admissible despite later reduction in supplier assessable value.

CENVAT credit on inputs remained admissible where duty had actually been paid by the input supplier and was reflected in statutory invoices, even if the supplier's assessable value was later reduced. Rule 3(1) of the CENVAT Credit Rules, 2002/2004 was applied on the basis of the phrase "duty leviable and paid", so the recipient's entitlement was not defeated by a subsequent revision at the supplier's end. The demand for reversal of credit and the related penalty could not be sustained.

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Issues: Whether CENVAT credit on inputs is admissible to the manufacturer of final products on the duty actually paid by the input supplier, even when the assessable value of the inputs is later reduced and the department seeks reversal of the excess credit.

Analysis: Under Rule 3(1) of the CENVAT Credit Rules, 2002/2004, credit is available on the duty leviable on the inputs and paid by the input manufacturer or supplier, as evidenced by the statutory invoices. The later reduction in assessable value at the supplier's end does not alter the fact that the recipient had received inputs on which duty had in fact been paid. The dispute was governed by the expression "duty leviable and paid", and credit could not be denied merely because the supplier's assessable value was subsequently reduced. The prior Tribunal decision on an identical issue was followed.

Conclusion: CENVAT credit of the duty actually paid on the inputs was admissible, and the demand for reversal of the credit and the penalty could not survive.

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