Cenvat credit utilisation clarified by circular, allowing additional excise duty credit to offset Central Excise duty liability.

Cenvat credit of additional duty of excise taken during 1996-99 was held utilisable for payment of Central Excise duty on final products, despite an objection based on Rule 57AB(2)(b). The dispute was resolved in favour of the assessee because Circular No. 700/16/2003/C.X. clarified that credit of additional duty approved before 1-3-2003 could be used for payment of Cenvat duty as well as additional duties of excise. In view of that binding clarification, the earlier departmental bar was no longer sustainable and the credit was treated as admissible.

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Issues: Whether Cenvat credit of additional duty of excise taken during 1996-99 could be utilised towards payment of Central Excise duty on final products despite the bar under Rule 57AB(2)(b) of the Central Excise Rules.

Analysis: The dispute turned on whether the departmental objection survived after the clarification issued in Circular No. 700/16/2003/C.X., which stated that credit of additional duty approved prior to 1-3-2003 could be used for payment of Cenvat duty as well as additional duties of excise. In light of this clarification, the earlier view that the credit was barred under Rule 57AB(2)(b) was no longer sustainable.

Conclusion: The credit was admissible and could be utilised for payment of duty. The departmental stand was rejected.

Final Conclusion: The appeal succeeded and the impugned order was set aside, leaving the assessee entitled to use the disputed credit.

Ratio Decidendi: A binding departmental circular clarifying permissibility of utilisation of credit prevails for the purpose of resolving the dispute where the earlier objection is rendered untenable.

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