Supplementary invoice credit allowed where additional duty was later paid on inputs; penalty rejected absent misconduct.

Credit on supplementary invoices was permitted where the supplier later paid additional duty after re-determination of the assessable value, because the credit scheme was intended to follow the actual duty paid on inputs already received. The recipient unit could not be denied additional credit merely on procedural grounds when the governing rules treated supplementary invoices as valid invoices for credit purposes. As no fraud, collusion, suppression, or similar misconduct was alleged, the penalty was not justified.

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Issues: Whether credit of additional duty paid by the supplier on supplementary invoices issued after re-determination of assessable value could be denied to the recipient unit, and whether penalty was sustainable.

Analysis: The inputs had already been received in the factory and the original duty-paid credit had been taken. The supplier subsequently paid additional duty after the assessable value was re-determined and raised supplementary invoices. Rule 57AE, as amended by Notification No. 6/2001-C.E. (N.T.) dated 01-03-2001, permitted credit on supplementary invoices, and in any event supplementary invoices were treated as invoices for the purpose of Rule 57AB. The reasoning further held that credit under Rule 57AB must track the actual duty paid, so where additional duty is paid later, corresponding additional credit accrues to the recipient unit. No allegation of fraud, collusion, suppression, or similar misconduct was made.

Conclusion: The assessee was entitled to take credit on the supplementary invoices, and the penalty was not justified.

Ratio Decidendi: Where additional duty is subsequently paid on inputs already received and supplementary invoices are issued, credit cannot be denied merely on procedural grounds if the substantive duty liability has increased and the governing credit provisions permit credit on such invoices.

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