Input credit remains available when duty is paid on the goods, despite a pending dispute over the supplier's final liability.

Credit on inputs could not be denied to the recipient merely because the supplier's full duty liability remained under dispute. The supplier had already paid duty on the undisputed portion, and the controversy before the High Court concerned only the final quantum of liability. Since Notification No. 58/97-C.E. was satisfied once duty payment on the inputs was established, the recipient's credit remained admissible. The pending dispute over the supplier's remaining liability did not defeat the recipient's entitlement to credit.

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Issues: Whether credit on inputs could be denied to the recipient merely because the supplier's full duty liability was under dispute, where duty had already been paid by the supplier on the undisputed portion and the dispute with the department was pending before the High Court.

Analysis: The duty payment by the supplier on the inputs was not in dispute, and the controversy related only to the exact quantum of duty liability as between the department and the supplier. The recipient had taken credit under Notification No. 58/97-C.E., and the condition of that notification was satisfied once it was established that duty had in fact been paid by the supplier. The pending dispute regarding the supplier's final liability did not justify denial of credit to the recipient, particularly when the undisputed portion of duty had already been discharged.

Conclusion: Credit could not be denied to the recipient of the goods, and the appeal was allowed.

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