Cenvat credit on supplementary invoices upheld where differential duty payment was revenue neutral and suppression was not established.

Cenvat credit on supplementary invoices was stated to be admissible where the supplier later paid differential duty after a short payment caused by an incorrect costing method. The text notes that the short payment was not due to clandestine removal, and that the common ownership of supplier and recipient made the duty payment revenue neutral because the same duty would have been available as credit. It also states that suppression of facts or intent to evade duty was not established, as no explicit finding of suppression had been recorded and a token penalty in the supplier's settlement did not prove evasion. On these facts, denial of credit was said to be unjustified.

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Issues: Whether Cenvat credit was admissible on the strength of supplementary invoices issued for differential duty paid by the supplier unit after short payment was noticed, and whether suppression of facts or intent to evade duty was established so as to deny the credit.

Analysis: The short payment arose from an incorrect costing method and not from clandestine removal. The supplier unit subsequently paid the differential duty and issued supplementary invoices. Since both units belonged to the same company, the duty paid by the supplier would have been available as credit to the recipient, making the situation revenue neutral and negating any inference of intent to evade duty. The settlement of the supplier unit's matter with only a token penalty did not establish suppression of facts, particularly when no explicit finding of suppression had been recorded. On these facts, denial of credit was not justified.

Conclusion: The credit on supplementary invoices was admissible and the assessee succeeded.

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