Cenvat credit on duty-paid inputs under invalidated advance authorisation was upheld where supplier duty payment was undisputed.

Cenvat credit was held admissible on duty-paid indigenous inputs procured against an invalidated advance authorisation because the scheme permits such procurement for intermediate supply and the supplier's duty payment was not disputed. Once duty had been assessed and paid at the supplier's end, the recipient manufacturer was entitled to avail the credit, and the recipient's officer could not reopen the quantum of duty so determined. The result was that the assessee was allowed Cenvat credit on the inputs.

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Issues: Whether Cenvat credit was admissible on duty paid indigenous inputs procured against an invalidated advance licence or authorization.

Analysis: The scheme of advance authorization operates as a duty exemption mechanism for customs duties, and the policy framework permits invalidation for procurement of duty-free inputs from indigenous sources for intermediate supply. The dispute concerned whether duty paid on such indigenous inputs could validly be taken as Cenvat credit by the recipient manufacturer. Reliance was placed on the principle that, where the duty has been assessed and paid at the supplier's end, the recipient unit is entitled to avail the benefit and the recipient's officer cannot reopen the quantum of duty so determined.

Conclusion: The credit was admissible and the assessee was entitled to it.

Ratio Decidendi: Where duty-paid inputs are procured against an invalidated advance authorization and the supplier's duty payment is not in dispute, the recipient manufacturer is entitled to avail Cenvat credit on such inputs.

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