credit

No we can take the credit if we paid it ( purchase).

No, We can take the credit if we paid it ( inclusive of purchase).

I think in taxation of goods there need not be nexus between purchases and payment thereof to the vendor.  If the vendor is supplying material with VAT in it, I believe, credit can be taken as the same will be sold and output tax will be paid.  It may also be noted that liability to output tax and eligiblity to input tax crystalises on delivery of goods/receipt of materials and not on settlement of account.

Goods given by the vendor, free of cost, will be adjusted by accounting it as incentive/discount. 

Please correct me, if I am wrong

Rgds/Dharmaraju