Cenvat credit on capital goods cannot be denied when duty was accepted at clearance and invoice support exists.

Cenvat credit on capital goods could not be denied merely because the supplier was later said to have paid excise duty in excess, where the department had accepted the duty calculation at the time of clearance and the assessee took credit on the basis of the invoice. The accepted duty payment and corresponding invoice supported the credit claim, and the later Revenue objection did not justify reversal absent any refund claim or prejudice to the Revenue. The denial of credit was therefore unjustified, and the credit allowed to the assessee was sustained.

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Issues: Whether Cenvat credit on capital goods could be denied on the ground that the supplier had paid excise duty in excess of the duty actually payable, despite the duty calculation having been accepted by the department at the time of clearance.

Analysis: The capital goods were sold by the supplier on the basis of a duty calculation communicated to and accepted by the department, and the assessee took credit on the strength of the invoice issued for that clearance. Once the duty paid by the supplier had been accepted without objection at the time of removal, the assessee could not be denied credit merely because the Revenue later treated part of that duty as excessive. The Tribunal's view was also consistent with the fact that the alleged excess payment had not resulted in any refund claim and, therefore, caused no justifiable prejudice to the Revenue.

Conclusion: The denial of Cenvat credit was not justified, and the assessee was entitled to the credit claimed.

Final Conclusion: The appeal failed, and the order granting credit to the assessee was sustained.

Ratio Decidendi: Where duty paid on clearance of capital goods has been accepted by the department and the assessee avails credit on the basis of the corresponding invoice, credit cannot be denied merely on a later view that the supplier paid excess duty.

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