Cenvat credit on DFCE-paid imports upheld where assessments were accepted and no willful suppression was proved.

Cenvat credit cannot be denied on imported inputs where duty was discharged by debit in the DFCE account, the bills of entry were assessed without objection, and the customs authorities raised no contemporaneous challenge. The dispute was treated as revenue neutral because the available scrip balance could be used for later imports. In the absence of proved willful suppression or misrepresentation, the demand was held unsustainable and the denial of credit was set aside in favour of the assessee.

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Issues: Whether Cenvat credit could be denied where the duty on imported inputs was discharged by debit in DFCE account and the assessments were accepted without objection, and whether the demand could survive in the absence of willful suppression.

Analysis: The imported goods were cleared on assessed bills of entry, the duty element was discharged through debit in the DFCE account, and the customs authorities raised no objection at the relevant time. The dispute was also viewed as revenue neutral, as the appellant could utilize the available scrip balance for subsequent imports. On these facts, the ingredients of willful suppression or misrepresentation were not established, and the denial of credit was found to be unsustainable.

Conclusion: The denial of Cenvat credit was set aside and the issue was decided in favour of the assessee.

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