Cenvat credit cannot be denied when duty paid by the supplier was accepted as correct by its jurisdictional officers.

Cenvat credit on rotogravure printing cylinders could not be denied merely because a field formation considered the supplier eligible for exemption under Notification No. 49/2006-CE. The supplier's jurisdictional officers had clarified that duty was correctly paid and that the supplier should continue paying duty without availing the exemption. On that basis, the recipient's jurisdictional officer could not dispute the correctness of the duty payment or reject credit on the contrary view that the exemption should have been claimed. The recipient was therefore entitled to Cenvat credit, and the demand was unsustainable.

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Issues: Whether the appellant was entitled to Cenvat credit on rotogravure printing cylinders when the supplier had paid duty and the department alleged that the goods were exempt under Notification No. 49/2006-CE.

Analysis: The denial of credit rested only on the premise that the supplier ought to have availed the exemption notification and that the duty was therefore wrongly paid. The record showed a clarification by the supplier's jurisdictional officers that the duty had been correctly paid and that the supplier should continue paying duty without availing the exemption. The jurisdictional officer of the recipient could not question the correctness of that assessment.

Conclusion: The appellant was correctly entitled to avail Cenvat credit and the demand was unsustainable.

Ratio Decidendi: Where duty has been accepted as correctly paid by the supplier's jurisdictional authority, the recipient's Cenvat credit cannot be denied on the contrary view of another field formation that the supplier should have availed an exemption notification.

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