CENVAT credit on transit sale inputs remained admissible despite unregistered intermediaries and procedural lapses.

CENVAT credit was held admissible where duty-paid inputs moved directly from the manufacturer to the assessee under the manufacturer's invoice in a transit sale arrangement. The circular applied to such transactions clarified that no separate invoice under Rule 57G was required and that intermediaries taking part in the transit sale need not be registered. Because the inputs and supporting duty-paid documents were received and used in manufacture, the presence of unregistered intermediaries and minor procedural lapses did not justify denial of credit when the substantive conditions were satisfied.

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Issues: Whether CENVAT credit could be denied when duty-paid inputs were received directly by the assessee under manufacturers' invoices through unregistered intermediaries in a transit sale arrangement.

Analysis: The circular relied on by the parties clarified that goods moved directly from the manufacturer's premises to the user's premises on the manufacturer's invoice in a transit sale, and that no separate invoice under Rule 57G of the Central Excise Rules, 1994 was required. It further stated that persons taking part in such transit sale need not get themselves registered. The inputs and duty-paid documents were admittedly received by the assessee and used in manufacture, and the mere presence of unregistered intermediaries did not disqualify the credit claim. Minor procedural lapses could not be the basis for denial of credit where the substantive conditions were satisfied.

Conclusion: CENVAT credit could not be denied, and the issue was decided in favour of the assessee.

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