CENVAT credit on duty-paid inputs cannot be denied merely because the supplier's process is not manufacture.

CENVAT credit on inputs cannot be denied merely because the supplier's process is later held not to amount to manufacture. Where duty has been paid on the inputs, and the invoices evidence such payment, the decisive factors remain receipt of duty-paid inputs and their use in the manufacturing chain. Prior Tribunal decisions had already treated the issue as settled on the same principle. The stated effect is that credit remains available to the assessee in such circumstances.

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Issues: Whether CENVAT credit could be denied to a manufacturer who received inputs on payment of duty merely because the supplier's process did not amount to manufacture.

Analysis: The entitlement to credit depends on receipt of inputs on payment of duty and their use in the manufacturing chain. Where duty has been paid on the inputs and the invoices evidence such payment, the absence of manufacture at the supplier's end does not, by itself, justify denial of credit. The matter was treated as no longer res integra in view of prior Tribunal decisions applying the same principle.

Conclusion: CENVAT credit could not be denied, and the issue was decided in favour of the assessee.

Ratio Decidendi: Credit on duty-paid inputs cannot be refused merely because the supplier's process is later held not to amount to manufacture.

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