Cenvat credit on duty-paid inputs remains admissible despite a possible duty-free procurement route under the export incentive scheme.

Cenvat credit on duty-paid indigenous inputs was held admissible where the supplier had actually paid central excise duty, and the assessee could not be denied credit merely because the same goods could have been procured duty free under the applicable export incentive scheme. The issue was treated as settled by precedent, with the earlier Tribunal view accepted by the High Court and left undisturbed in further proceedings. Credit was therefore upheld despite the existence of an invalidation letter and the alternative duty-free procurement route.

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Issues: Whether cenvat credit of central excise duty paid on inputs purchased from indigenous suppliers was admissible to the assessee despite availability of procurement under the duty exemption scheme and issuance of an invalidation letter.

Analysis: The entitlement to cenvat credit on duty-paid inputs was held to be governed by the settled legal position that where the inputs are received on payment of central excise duty, credit cannot be denied merely because the assessee could have procured the goods duty free under the relevant export incentive mechanism. The issue was treated as no longer res integra, the earlier Tribunal view having been accepted by the High Court and left undisturbed in higher appellate proceedings.

Conclusion: Cenvat credit was admissible and the assessee's claim was upheld.

Ratio Decidendi: Credit of duty paid on eligible inputs cannot be denied solely because the assessee was also entitled to procure the same inputs duty free under the applicable scheme, where the duty has in fact been paid by the supplier and the issue stands settled by precedent.

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