Deemed credit continues on notification replacement where no express lapse clause exists; duty demand and penalty fail.

Where a deemed credit scheme is continued under a subsequent notification for the same commodity, previously earned but unutilised credit remains available unless the later notification expressly provides for lapse. Rescission of the earlier notification alone does not extinguish accrued credit. On that basis, the duty demand and penalty were held unsustainable, and the assessee obtained consequential relief with the impugned orders set aside.

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Issues: Whether deemed credit earned under an earlier notification could be utilised after issuance of a subsequent notification, and whether the duty demand and penalty could be sustained in the absence of an express provision for lapse of the unutilised credit.

Analysis: The deemed credit scheme was continued under the later notification for the same commodity. The later notification did not expressly provide that the balance of deemed credit already earned and lying unutilised would lapse. In such a situation, the accrued credit could not be denied merely because the earlier notification had been rescinded and replaced. The confirmation of duty demand and imposition of penalty were therefore unjustified.

Conclusion: The issue is decided in favour of the assessee. The demand and penalty could not be sustained, and the appeal succeeded.

Final Conclusion: The impugned orders were set aside and the assessee obtained the consequential relief flowing from allowance of the appeal.

Ratio Decidendi: Where a credit scheme is continued by a subsequent notification and there is no express provision that previously earned and unutilised credit lapses, such credit remains available for utilisation and cannot be denied on the basis of rescission of the earlier notification alone.

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