CENVAT credit denial cannot be sustained where duty on the final product already exceeds the disputed credit amount.

Where duty on the final product had already been paid in an amount exceeding the CENVAT credit sought to be denied, the Tribunal treated that fact as decisive and applied the principle that credit should not be denied in such circumstances. The appellant's claim as a merchant exporter using raw material supplied through a supporting manufacturer under the relevant CENVAT scheme and import notification was accepted for interim relief purposes, and pre-deposit was waived with recovery stayed.

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Issues: Whether pre-deposit and recovery could be stayed where the appellant had already paid duty on the final product in excess of the credit sought to be denied.

Analysis: The appellant claimed to be a merchant exporter and asserted that the imported raw material was supplied for manufacture by a supporting manufacturer under the relevant CENVAT scheme and import notification. The decisive consideration was that the duty already paid on the final product exceeded the amount of credit under dispute. The Tribunal relied on the principle that once duty on the final product has been accepted, credit cannot be denied in such circumstances.

Conclusion: Pre-deposit was waived and recovery was stayed in favour of the appellant.

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