AED(T) credit utilisation need not follow one-to-one input correlation where credit is used only against AED(T) liability.

Notification No. 21/99 and Rule 57F(12) allowed utilisation of specified AED(T) credit only against AED(T) liability on eligible final products, with separate accounting of the credit and its use. The Tribunal held that the scheme did not require a one-to-one correlation between duty paid on inputs and duty paid on final products. Because the assessee used AED(T) credit only for payment of AED(T) on cotton yarn and blended yarn manufactured by it, the credit could not be denied on that basis and the Revenue's appeal failed.

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Issues: Whether the assessee was entitled to utilise credit of AED(T) for payment of AED(T) duty on its final products and whether a one-to-one correlation between the duty paid on inputs and the duty paid on final products was required.

Analysis: Notification No. 21/99 and Rule 57F(12) of the Central Excise Rules, 1944 permitted utilisation of specified duty credit for payment of duty on eligible final products, subject to the stated restriction that AED(T) credit could be used only towards AED(T) liability. The Tribunal accepted that credit and its utilisation had to be separately accounted for, but held that the scheme did not require a one-to-one correlation. Since the assessee was using AED(T) credit only for payment of AED(T) on cotton yarn and blended yarn manufactured by it, the credit could not be denied on that ground.

Conclusion: The assessee was entitled to the credit and no one-to-one correlation was required; the Revenue's appeal failed.

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