Cenvat credit need not be reversed for later cash discount absent proof of supplier refund or excess duty retention.

Cenvat credit taken on duty shown in supplier invoices was not required to be reversed merely because the supplier later granted a cash discount reducing the invoice price. Credit had been validly availed on the basis of invoices showing duty actually paid, and a later price reduction did not by itself establish excess or wrong credit. Reversal would arise only if investigation showed that the supplier had obtained a refund or otherwise retained excess duty, and no such evidence was available. The demand for reversal was therefore not sustainable on the facts found, and relief followed.

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Issues: Whether Cenvat credit taken on the duty shown in the supplier's invoices had to be reversed merely because the supplier later granted a cash discount reducing the invoice price, in the absence of any finding that the supplier obtained refund of excess duty.

Analysis: Credit was availed on the basis of invoices reflecting duty actually paid by the supplier. A subsequent reduction in price by way of discount does not by itself justify compelled reversal of credit. Reversal may arise only where investigation shows that the supplier obtained refund or excess credit was otherwise wrongly retained, but no such investigation or evidence was available in the present case.

Conclusion: The demand for reversal of credit was not sustainable on the facts found, and the appeal succeeded with consequential relief.

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