CENVAT credit on stock-transferred inputs upheld where procurement, not purchase, satisfied the rule and duty-paid goods were used in manufacture.

CENVAT credit on inputs and semi-finished goods transferred between units on stock transfer basis was held admissible even without a purchase transaction. The governing rules did not require purchase as a mandatory condition; the later substitution of "procured" for "purchase" in Rule 7(4) of the CENVAT Credit Rules, 2002 was treated as confirming that acquisition by procurement was sufficient. Where duty had been paid and the inputs were used in manufacture, the mode of acquisition was immaterial. The Revenue's challenge therefore failed.

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Issues: Whether CENVAT credit was admissible on inputs transferred between units on stock transfer basis without a purchase transaction.

Analysis: The dispute related to credit taken on inputs and semi-finished goods transferred from base factories to other units on stock transfer invoices. The governing provisions did not make purchase a mandatory condition for availing credit. The later substitution of the word "procured" for "purchase" in Rule 7(4) of the CENVAT Credit Rules, 2002 reflected the legislative intent that acquisition by procurement, and not necessarily by purchase, was sufficient. The reasoning also treated the mode of acquisition of inputs as immaterial where duty had been paid and the inputs were used in manufacture.

Conclusion: CENVAT credit on stock-transferred inputs was held admissible, and the Revenue's challenge failed.

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