NCCD input credit need not be reversed when finished goods later become exempt from NCCD under governing precedent.

Credit of NCCD taken on inputs was not required to be reversed merely because the finished goods later became exempt from NCCD. The Tribunal treated the exemption notification and Section 136 of the Finance Act as insufficient to displace the cited precedent, which held that PTY was not to be treated as exempted goods simply because other duties remained leviable and that NCCD credit could be utilised or refunded in appropriate cases. Applying that precedent as directly governing, the Tribunal held that reversal of credit was not warranted on the facts and rejected the departmental appeal.

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Issues: Whether credit of NCCD taken on inputs was required to be reversed merely because the finished goods became exempt from NCCD with effect from 17-5-2003.

Analysis: The dispute turned on the effect of the exemption granted under the relevant notification and the operation of Section 136 of the Finance Act. The Tribunal noted that the departmental appeal did not show why the earlier Tribunal decision, which held that PTY could not be treated as exempted goods merely because other duties remained leviable and that NCCD credit could be utilised or refunded in appropriate cases, was inapplicable. The cited precedent was treated as squarely governing the facts.

Conclusion: Credit of NCCD was not required to be reversed on the facts of the case, and the departmental appeal failed.

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