CENVAT credit on duty-paid inputs cannot be denied by questioning the supplier's duty liability after jurisdictional confirmation.

CENVAT credit on printing cylinders was held admissible where the supplier had paid duty and had obtained clarification from its own jurisdictional central excise authorities confirming that payment. The recipient's credit could not be denied merely because the department believed the goods were exempted and duty should not have been paid. The ruling emphasised that whether duty was correctly payable on the supplier's clearances was for the supplier's jurisdictional officers to examine, and the recipient's officer could not re-agitate that issue to refuse credit. The demand was therefore unsustainable.

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Issues: Whether cenvat credit was admissible to the recipient on printing cylinders where duty had been paid by the supplier, notwithstanding the department's view that the goods were exempted and duty ought not to have been paid.

Analysis: The denial of credit rested solely on the assumption that the supplier had wrongly paid duty by not availing the exemption notification. The record showed that the supplier had obtained clarification from its jurisdictional central excise authorities that duty had been correctly paid without availing the exemption. The determination whether duty was correctly payable or not lay with the supplier's jurisdictional officers, and the recipient's jurisdictional officer could not question that assessment for the purpose of denying credit.

Conclusion: The cenvat credit was correctly availed by the appellant and the demand was unsustainable.

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