CENVAT credit on duty-paid inputs cannot be denied because the supplier's excisability or classification is disputed.

CENVAT credit on duty-paid ethanol or un-denatured alcohol cannot be denied merely because the supplier's classification or duty liability is later disputed. The analysis states that entitlement under the CENVAT scheme is assessed with reference to the receiving assessee, and the receiver is not required to determine in every case whether duty was correctly payable by the supplier. It also notes that the issue had already attained finality in the assessee's favour in prior litigation and was followed in connected matters, reinforcing that credit remained available on the stated ground.

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Issues: Whether CENVAT credit taken on duty-paid ethanol or un-denatured alcohol could be denied on the ground that the goods were allegedly non-excisable or wrongly classified by the supplier.

Analysis: The dispute was treated as covered by earlier decisions holding that credit is to be tested with reference to the receiving assessee's entitlement under the CENVAT scheme and that there is no obligation on the receiver to determine, for every input received, whether duty was correctly payable by the supplier. The judgment also noted that the issue had already attained finality in the assessee's favour in prior litigation and had been followed in connected cases.

Conclusion: CENVAT credit could not be denied on the stated ground, and the assessee succeeded on the issue.

Ratio Decidendi: CENVAT credit cannot be denied merely because the supplier's classification or duty liability is disputed, where the receiver has taken credit on duty-paid goods and there is no legal obligation on the receiver to independently decide the supplier's excisability in each case.

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