Transitional CENVAT credit is limited to pre-earned Modvat credit; stock issued after the changeover date does not qualify.

Transitional CENVAT credit under the amended scheme was confined to credit actually earned under the earlier Modvat rules and left unutilised on 1-4-2000. Glass bottles and plastic crates lying in stock on 31-3-2000 did not qualify where no credit had accrued on those goods before the appointed date. Their later issue for use after 1-4-2000 did not create a right to credit under the new regime. The denial of credit was therefore sustained, confirming that mere stock position on the changeover date is insufficient without pre-existing earned credit.

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Issues: Whether the appellant was entitled to take Modvat credit on glass bottles and plastic crates lying in stock on 31-3-2000 and issued for use after 1-4-2000 under the amended credit scheme.

Analysis: Rule 57AB allowed CENVAT credit only on inputs or capital goods received in the factory on or after 1-4-2000. Rule 57AG preserved only credit already earned under the earlier rules and remaining unutilised on that date. The appellant had not been eligible to avail credit on the bottles and crates prior to 1-4-2000 and therefore could not be said to have earned any credit on those goods under the earlier regime. Mere issue of those goods for use after 1-4-2000 did not convert them into credit already earned before the appointed date.

Conclusion: The appellant was not entitled to Modvat credit on the stock of glass bottles and plastic crates as on 31-3-2000.

Final Conclusion: The order denying the credit was sustained and the appeal failed.

Ratio Decidendi: Transitional credit under the new CENVAT regime is available only to credit actually earned under the earlier rules and remaining unutilised on the appointed date, and not to inputs on which no credit had accrued before that date.

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