Cenvat credit on sister-unit inputs allowed where duty-paid invoices and proper accounting records establish receipt and use in manufacture.

Cenvat credit on inputs received from a sister unit could not be denied where the inputs were supported by proper duty-paying invoices, showed duty particulars, and were duly recorded in RG-23 Part-I and Part-II. On these facts, there was no material to establish contravention of the conditions governing credit under the relevant Central Excise and Cenvat rules, and credit was therefore admissible. The demand was not sustainable because duty-paid receipt and use in manufacture were established, and movement from a sister unit alone was insufficient to deny credit.

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Issues: Whether Cenvat credit could be denied on inputs received from a sister unit when the inputs were supported by proper invoices, duty payment particulars and accounting records.

Analysis: The inputs were found to have been received from the Pune unit under proper central excise invoices showing description, value and duty particulars. The record also showed accounting of the receipts in RG-23 Part-I and Part-II. On these facts, there was no material to hold that the appellant had contravened the requirements governing availment of credit under Rule 57AE of the Central Excise Rules, 1944 and Rule 7 of the Cenvat Credit Rules, 2002. The earlier decision on an identical issue was applied, holding that credit cannot be denied merely because the inputs moved from a sister unit when duty-paid receipt and use in manufacture are established.

Conclusion: Cenvat credit could not be denied, and the demand was not sustainable.

Ratio Decidendi: Cenvat credit on inputs received from a sister unit cannot be denied where the inputs are covered by proper duty-paying documents and are duly accounted for and used in manufacture.

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