Cenvat credit on supplementary invoices allowed where differential duty was paid voluntarily and misdeclaration was not established

Cenvat credit on supplementary invoices was held admissible where the supplier had voluntarily paid differential duty arising from a valuation dispute and no adjudicated finding of misstatement or misdeclaration had been established against the supplier. The bar under Rule 7(1)(b) was not attracted merely on an assumption of supplier misdeclaration, so the recipient could not be denied credit on that basis. The denial of credit was set aside and consequential relief followed in favour of the assessee.

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Issues: Eligibility of Cenvat credit on supplementary invoices when the supplier had paid differential duty voluntarily and no finding of misstatement or misdeclaration had been established against the supplier.

Analysis: Credit under Rule 7(1)(b) was denied on the assumption that the supplier had misdeclared the goods, but the record showed only voluntary payment of differential duty arising from a valuation dispute. In the absence of any adjudicated finding against the supplier for misstatement or misdeclaration, the bar was held not to be attracted at the recipient's end. The denial of credit therefore could not be sustained.

Conclusion: The credit on supplementary invoices was held admissible and the denial was set aside, in favour of the assessee.

Final Conclusion: The appeal succeeded with consequential relief, as the restriction on credit was found inapplicable on the facts.

Ratio Decidendi: A recipient cannot be denied Cenvat credit on supplementary invoices merely on a presumption of supplier misdeclaration when no such finding has been established against the supplier and the differential duty was paid voluntarily on a valuation dispute.

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