Accrued Modvat credit remained utilisable after withdrawal of the facility because no express provision made the balance lapse.

Withdrawal of the deemed Modvat credit facility from 1 April 1995 did not, by itself, extinguish credit lawfully accumulated and lying unutilised in the assessee's books as on 31 March 1995. In the absence of any express prohibition in the withdrawing instrument, the balance credit remained available for utilisation against duty on final products after the withdrawal date. The Revenue's objection failed because prospective withdrawal of a credit scheme does not automatically cause accrued credit to lapse unless the governing instrument clearly so provides.

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Issues: Whether the assessee could utilise the balance deemed Modvat credit lying unutilised in its books as on 31 March 1995 after withdrawal of the deemed credit facility with effect from 1 April 1995.

Analysis: The assessee had been availing exemption under Notification No. 1/93-C.E. and Modvat credit under Rule 57A, including deemed Modvat credit on re-rollable material under Rule 57G(2). The later Government order withdrew the deemed credit facility from 1 April 1995, but did not contain any express prohibition against utilising credit already accumulated and lying unutilised as on 31 March 1995. In the absence of a clear disabling provision, the withdrawal of the facility could not be read as causing automatic lapse of the balance credit already standing in the assessee's books.

Conclusion: The balance deemed credit could be utilised by the assessee for payment of duty on final products after 1 April 1995, and the Revenue's challenge failed.

Final Conclusion: The appeal was rejected as the withdrawal of the deemed credit facility did not extinguish the accrued balance of credit already available with the assessee.

Ratio Decidendi: Unless the withdrawing instrument expressly provides otherwise, accumulated credit lawfully earned before withdrawal of a credit facility remains utilisable and does not lapse merely because the facility is prospectively withdrawn.

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