Cenvat credit on duty-paid invoices sustained, and merits-based disposal upheld without remand where no substantial question of law arose

Cenvat credit was upheld where the assessee relied on duty-paid invoices for inputs cleared as such, even though the duty charged by the supplier exceeded the duty otherwise assessable on those inputs; the credit could not be denied merely on that difference, and reversal of the disputed credit was not sustainable. The Tribunal's decision to address the dispute on merits, rather than remand the matter after rejection for non-compliance with pre-deposit, was also found unobjectionable because no substantial question of law arose and the merits supported the assessee.

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Issues: (i) Whether the assessee was entitled to Cenvat credit on the strength of duty-paid invoices where the supplier had charged duty on the inputs cleared as such; (ii) Whether the Tribunal was justified in deciding the controversy on merits instead of remanding the matter to the Commissioner (Appeals) after the appeal had been rejected for non-compliance with pre-deposit.

Issue (i): Whether the assessee was entitled to Cenvat credit on the strength of duty-paid invoices where the supplier had charged duty on the inputs cleared as such.

Analysis: The declared value of the inputs and the duty lawfully payable thereon were different from the amount of duty charged by the supplier, but the supplier had actually recovered duty on clearance of the inputs and the assessee had taken credit on the basis of those duty-paid invoices. The Tribunal relied on the Board's circular and treated the assessee as a bona fide purchaser. On that footing, the credit could not be denied merely because the amount charged exceeded the duty otherwise assessed on the inputs.

Conclusion: The assessee was entitled to take the credit on the basis of the duty-paid invoices, and the demand for reversal of the disputed credit was not sustainable.

Issue (ii): Whether the Tribunal was justified in deciding the controversy on merits instead of remanding the matter to the Commissioner (Appeals) after the appeal had been rejected for non-compliance with pre-deposit.

Analysis: The Court found no illegality in the Tribunal's course of proceeding. Merely because the Tribunal decided the substantive issue while considering the stay and appeal proceedings did not require interference or remand, particularly when no substantial question of law arose and the merits supported the assessee.

Conclusion: The Tribunal was justified in deciding the matter on merits and remand was not warranted.

Final Conclusion: The revenue's challenge failed because the assessee's credit claim was upheld and the Tribunal's merits-based disposal was left undisturbed.

Ratio Decidendi: A duty-paid invoice basis can sustain Cenvat credit for the purchaser where the supplier has charged duty on clearance of inputs, and a remand is unnecessary if the appellate tribunal validly decides the merits and no substantial question of law arises.

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