Transitional CENVAT credit on duty-paid inputs was upheld where the Board circular covered pre-cut-off receipts and no mala fides existed.

CENVAT credit on duty-paid plastic crates and glass bottles lying in balance on 1-4-2000 was held admissible under the transitional credit scheme, because the Board's clarification protected inputs received in the factory on or before 31-3-2000 even where credit had not yet been taken. The Tribunal treated the circular as binding on departmental authorities, noted that receipt and duty payment were undisputed, and found no mala fides or irregular availment. Denial of credit would have defeated the transitional scheme, so the Revenue's challenge failed and the order granting credit, interest relief, and deletion of penalty was sustained.

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Issues: Whether CENVAT credit on plastic crates and glass bottles lying in balance as on 1-4-2000 was admissible in view of the Board circular and the transitional credit scheme.

Analysis: The Commissioner (Appeals) had relied upon the Board's clarification that where inputs had been received in the factory on or before 31-3-2000 but credit had not been taken for some reason, the credit was nevertheless earned and could be availed under the transitional provision. The Tribunal held that the circular was binding on the departmental authorities and that the goods were duty paid, receipt was not in dispute, and there was no material to show any mala fide or irregular availment. In those circumstances, denial of credit would defeat the scheme and the clarification issued by the Board.

Conclusion: The credit was admissible and the Revenue's challenge failed.

Final Conclusion: The appeal was rejected and the order allowing CENVAT credit, interest relief, and consequential setting aside of penalty was sustained.

Ratio Decidendi: A binding Board circular granting transitional credit to duty-paid inputs received before the cut-off date must be followed by the authorities, and credit cannot be denied merely for procedural non-compliance in the absence of mala fides.

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