Cenvat credit on duty-paid exempt goods allowed where recipient cannot question supplier's duty assessment.

Cenvat credit was held admissible on inputs received under duty-paid invoices, even though the goods were otherwise exempt and no duty was required at the supplier's stage. The Tribunal applied the principle that the recipient is entitled to credit of duty actually paid and that the recipient's jurisdictional officers cannot reassess the supplier's duty liability or reopen whether duty was payable at the source. Treating the issue as settled by precedent, it recognised that the credit rules are designed to allow credit on duty-paid inputs and allowed the assessee's claim.

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Issues: Whether Cenvat credit is admissible on goods received under duty-paid invoices when the goods were otherwise exempted and no duty was required to be paid at the first stage.

Analysis: The appeal concerned entitlement to credit on Ferro Manganese Slag and Silico Manganese Slag for which duty had been paid by the supplier. The controlling principle applied was that the receiver is entitled to avail credit of duty actually paid, and the recipient's jurisdictional officers cannot sit in judgment over the supplier's assessment or re-open the question whether duty was payable at the supplier's end. The Tribunal relied on settled precedent and treated the issue as no longer res integra, also noting that the relevant credit rules are framed to allow credit of duty paid on inputs.

Conclusion: Cenvat credit was held admissible and the issue was decided in favour of the assessee.

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