Actual records and supporting certificates defeated notional duty computation and upheld Cenvat credit on inputs and sugar cess.

Actual production and clearance data, supported by a Chartered Accountant's certificate and unrebutted by contrary evidence, prevailed over a notional apportionment method, so duty could not be sustained on a mere estimated basis. Cenvat credit could not be denied only because some invoices were photocopies where receipt and duty payment on inputs were otherwise proved by records and certification. Credit on opening stock of duty paid sugar was admissible because the stock was shown to exist on the relevant date and to have been used in manufacture, despite objections on registration and RG-1 compliance. Sugar cess was also eligible for Cenvat credit as duty of excise, and the Revenue's challenge on that issue failed.

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Issues: (i) Whether the duty liability for the relevant period could be determined on a notional basis instead of the actual production and clearance figures; (ii) whether Cenvat credit could be denied merely because some invoices were photocopies when receipt and duty payment on inputs were otherwise supported; (iii) whether Cenvat credit on opening stock of duty paid sugar lying on the date from which duty was held payable was admissible; and (iv) whether credit of sugar cess was admissible for reducing the net duty liability.

Issue (i): Whether the duty liability for the relevant period could be determined on a notional basis instead of the actual production and clearance figures.

Analysis: The duty demand was worked out by proportionate allocation from annual production figures, even though actual monthly production and clearance data and a Chartered Accountant's certificate were available. No contrary evidence was produced to show that the actual figures were unreliable. A demand based on notional apportionment could not prevail over proved actual figures.

Conclusion: The notional computation of duty liability was unsustainable and the excess demand had to be reduced in favour of the assessee.

Issue (ii): Whether Cenvat credit could be denied merely because some invoices were photocopies when receipt and duty payment on inputs were otherwise supported.

Analysis: Rule 9 of the Cenvat Credit Rules, 2004 prescribes the documents for availing credit, but the core fact remained that receipt and use of duty paid inputs were not disputed. The assessee also produced Chartered Accountant's certification and supporting records, and the Revenue did not establish that the inputs were not received or were not duty paid. In such circumstances, insistence on original invoices alone was not justified.

Conclusion: Denial of Cenvat credit on this ground was set aside in favour of the assessee.

Issue (iii): Whether Cenvat credit on opening stock of duty paid sugar lying on the date from which duty was held payable was admissible.

Analysis: The opening stock of sugar on the relevant date was proved by accounting records and Chartered Accountant's certificate, and that stock was used in the manufacture of the dutiable final products. The objection based on absence of registration and RG-1 maintenance did not displace the substantive evidence of duty paid inputs and their use in manufacture. The evidence placed by the assessee was sufficient and was not shown to be false or fabricated.

Conclusion: The credit on opening stock of duty paid sugar was admissible in favour of the assessee.

Issue (iv): Whether credit of sugar cess was admissible for reducing the net duty liability.

Analysis: The Tribunal followed the settled view that sugar cess is in the nature of duty of excise and, therefore, falls within the Cenvat credit framework. The Karnataka High Court decision allowing such credit had not been stayed, and the principle of judicial discipline required adherence to that binding view. The Revenue's objection based on pendency of further challenge did not justify denial of credit.

Conclusion: Credit of sugar cess was correctly allowed and the Revenue's challenge failed.

Final Conclusion: The assessee succeeded on the core valuation and credit disputes, while the Revenue's objection to sugar cess credit was rejected. The impugned order was modified to grant the assessee the consequential relief flowing from the corrected duty and credit position.

Ratio Decidendi: Where actual production and clearance data and supporting certificates are available and are not disproved, duty cannot be sustained on a merely notional basis; and once receipt and use of duty paid inputs are otherwise established, Cenvat credit cannot be denied on a hyper-technical objection, including credit of sugar cess where it is treated as duty of excise.

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