CENVAT credit on supplementary invoices cannot be finally denied until the supplier's duty dispute is conclusively decided.
CENVAT credit on supplementary invoices cannot be finally denied merely because the supplier's alleged suppression or duty liability is still undecided. Where proceedings against the supplier remain pending and the factual basis for a conclusive denial is incomplete, the buyer's credit claim should not be rejected on that ground alone. The impugned order was therefore set aside and the matter remanded for fresh decision after the final outcome of the supplier's proceedings is ascertained and the appellant is heard.
Issues: Whether CENVAT credit taken on supplementary invoices could be denied merely because the supplier's duty liability had not yet attained finality and whether the matter required remand for ascertaining the final outcome of the proceedings against the supplier.
Analysis: The credit dispute turned on the status of the proceedings against the supplier and the effect of the allegation that duty had been discharged only after scrutiny and issue of notice. The order relied on the principle that where the supplier's alleged suppression or duty liability has not been conclusively established, denial of credit to the buyer is not justified on that basis alone. As the proceedings against the supplier were still pending before the Tribunal, the factual foundation for final denial of credit was not complete. The proper course was therefore to set aside the impugned order and remand the matter so that the final position in the supplier's proceedings could first be ascertained and the appellant heard thereafter.
Conclusion: The denial of CENVAT credit was not sustained on the existing record, and the matter was remanded for fresh decision after the outcome of the supplier's proceedings is determined.
Ratio Decidendi: CENVAT credit cannot be finally denied to a buyer on supplementary invoices when the supplier's alleged suppression or duty default has not yet been conclusively decided.
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AI Drafter ✕
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