Input credit cannot be denied solely because the invoice-issuing trader differs from the actual supplier when duty-paid goods are received.

Credit on duty-paid goods cannot be denied merely because the invoice and delivery challan were issued by a trader different from the actual suppliers. The decisive question is whether the goods actually received were other than those covered by the subsidiary gate passes and related duty-paid documents. Where the record shows receipt of the same goods and contains no proof of substitution, denial of credit is not justified. The arrangement is also consistent with ordinary commercial practice, where one trader acts as the contractual point of contact while procuring goods from others. On these facts, the credit was rightly taken and the order denying it was set aside.

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Issues: Whether credit could be denied merely because the invoices and delivery challans were issued by a trader different from the actual suppliers, when duty-paid goods were shown to have been received under subsidiary gate passes.

Analysis: The denial of credit rested only on the fact that the person issuing the bill and delivery challan was different from the persons who physically supplied the goods. That circumstance by itself did not establish that the goods received were different from those covered by the subsidiary gate passes. For denial of credit, it had to be shown that the goods actually received were not the goods on which duty had been paid. The record contained no such proof, and the arrangement was also consistent with ordinary commercial practice where an order is placed on one trader who procures supply from others while remaining the contractual point of contact.

Conclusion: Credit was rightly taken and could not be denied on the ground adopted by the department.

Final Conclusion: The appeal succeeded and the order denying credit was set aside.

Ratio Decidendi: Credit cannot be denied solely because the invoice-issuing trader differs from the actual suppliers unless it is shown that the goods received were not the duty-paid goods covered by the relevant documents.

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