Cenvat credit cannot be denied on a mere classification dispute where duty on the final product was paid and accepted.

Cenvat credit on inputs used in manufacture could not be denied merely because their classification was disputed, where duty on the final product had been paid and accepted. The Tribunal treated the decisive factors as receipt and use of the inputs in accordance with the Cenvat Credit Rules, rather than the classification controversy over the input goods. On that basis, the appellant's entitlement to credit was upheld, the impugned order was set aside, and the appeal was allowed.

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Issues: Whether the appellant was entitled to avail Cenvat credit on the inputs used in the manufacture of the final product when duty on the final product had been paid and accepted, notwithstanding the dispute on classification of the input goods.

Analysis: The appeal was decided on the basis that the final product had suffered duty and that the credit entitlement had to be examined under the Cenvat Credit Rules on the facts of receipt and use of the inputs. The classification controversy regarding the input goods was not taken as decisive for denying credit, and the Tribunal relied on the principle that where duty has been paid on the final product and accepted by the Department, input credit cannot be denied merely on the classification dispute.

Conclusion: The appellant was entitled to avail Cenvat credit. The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: When duty on the final product has been paid and accepted, Cenvat credit on eligible inputs cannot be denied merely because of a dispute over classification, if the inputs were received and used in manufacture in accordance with the credit rules.

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