AED (GSI) credit remains usable when duty is paid after the cut-off date, despite retrospective restriction.

AED (GSI) credit under the Cenvat Credit Rules, 2002 was held admissible where the duty was actually paid in January 2004 and the credit was taken and utilised on that payment, despite a retrospective amendment to Rule 3(6) limiting credit to duty paid on or after 1-4-2000. The restriction was not applied to defeat credit merely because the underlying manufacture period was earlier, especially where the Board's circular recognised use of such credit for payment of Cenvat duty. The disallowance was therefore unsustainable.

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Issues: Whether credit of Additional Excise Duty (Goods of Special Importance) paid in 2004 could be taken and utilised under the Cenvat Credit Rules, 2002 despite the retrospective amendment to Rule 3(6), where the duty related to goods manufactured earlier.

Analysis: The retrospective amendment to the explanation to Rule 3(6) of the Cenvat Credit Rules, 2002 restricted credit to AED (GSI) paid on or after 1-4-2000. However, the duty in the present case was actually paid in January 2004 pursuant to the Tribunal's earlier order, and the credit was taken and utilised on that same occasion. The Board's circular dated 6-3-2003 clarified that AED (GSI) credit accrued earlier could be used for payment of Cenvat duty. On that basis, the restriction was held not to operate against credit taken on payment made after the relevant cut-off date, and the denial of credit solely on the footing that the duty related to an earlier period was not accepted.

Conclusion: The credit was admissible and the disallowance was unsustainable.

Ratio Decidendi: Where AED (GSI) is paid after the cut-off date and credit is taken on such payment, a retrospective restriction on credit does not defeat the right to avail and utilise that credit merely because the underlying liability relates to an earlier manufacture period.

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