Modvat credit utilisation without one-to-one input-output correlation is permitted for payment of duty on final products.

Accumulated Modvat credit may be utilised to pay duty on the final product even where no credit was taken on the specific inputs used for that batch and no one-to-one correlation exists between inputs and output. The settled position noted by the Tribunal is that credit standing in the records is available for duty payment on the final product, and utilisation is not defeated merely because the final goods were manufactured from inputs on which credit was not availed. The Board circular cited was consistent with this interpretation, and the Revenue's objection to such utilisation was rejected.

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Issues: Whether accumulated Modvat credit could be utilised for payment of duty on the final product even when the final product was manufactured from inputs on which no credit had been availed and there was no one-to-one correlation between inputs and final product.

Analysis: The Tribunal noted the settled position that one-to-one correlation between inputs and final product is not required for utilisation of credit. Where credit stands accumulated in the records, it may be used for payment of duty on the final product regardless of whether a particular batch of final goods was manufactured from a batch of inputs on which no credit was taken. The Board circular relied upon was also consistent with this view.

Conclusion: The Revenue's objection to utilisation of the accumulated credit was rejected and the assessee was held entitled to use the Modvat credit for payment of duty.

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