Retrospective recovery under later Cenvat rules was rejected for earlier credit, with only limited pre-deposit directed.

A recovery provision in later credit rules does not apply retrospectively to credit taken under earlier Modvat/Cenvat regimes unless the statutory text clearly so provides. Rule 6(3) of the Cenvat Credit Rules, 2002 was therefore treated as inapplicable to credit already taken before those rules came into force, while Rule 12 and Rule 9 were read as preserving prior credit and notifications without extending the new recovery machinery backward. On the pre-deposit issue, only a limited deposit was directed for the amount prima facie relatable to the period governed by the 2002 Rules, with substantial interim relief otherwise granted.

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Issues: Whether the recovery machinery in Rule 6(3) of the Cenvat Credit Rules, 2002 could be applied to credit taken under the earlier Modvat/Cenvat regimes, and whether full waiver of pre-deposit was warranted.

Analysis: The application of Rule 6(3) was examined in the context of the earlier rules governing the credit already taken before the Cenvat Credit Rules, 2002 came into force. It was noted that Rule 12 and Rule 9 dealt with continuation of credit and validity of prior notifications and orders, but did not extend the recovery provision retrospectively to earlier periods. The Tribunal also held that the Supreme Court decision relied upon on reversal of credit did not, on a prima facie view, govern a rule that specifically provided for payment of an amount equal to the credit or eight per cent of the sale price, together with recovery under the prescribed machinery.

Conclusion: Rule 6(3) of the Cenvat Credit Rules, 2002 was held not to apply to credit taken under the preceding rules, but the assessee was directed to make a limited pre-deposit of the amount relatable to the period governed by the 2002 Rules.

Final Conclusion: The assessee obtained only partial relief, with the disputed demand being protected by a substantial waiver and a limited deposit direction confined to the amount prima facie covered by the 2002 regime.

Ratio Decidendi: A recovery provision in a later set of credit rules does not operate retrospectively to recover credit taken under earlier rules unless the statutory text clearly so provides.

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