CENVAT credit utilisation under exemption notification must reflect credit actually available in the relevant month, not a hypothetical balance.

An exemption notification condition requiring first utilisation of the CENVAT credit available on the last day of the relevant month is satisfied by credit actually available for use in that month, with only the balance duty payable in cash. Where the assessee first exhausted the credit that became available in December 2005 and then paid the balance through PLA, the notification condition was treated as complied with and the refund claim was allowed. A contrary assumption based on a not-yet-available November closing balance was not accepted, and the Revenue's appeal was dismissed as raising no question of law.

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Issues: Whether the assessee complied with condition 1A of Notification No. 39/2001-C.E. by first utilising the CENVAT credit available on the last day of the month under consideration before paying the balance duty in cash, and whether refund of the amount paid through PLA was therefore admissible.

Analysis: The exemption notification, as amended by Notification No. 65/2003, required first utilisation of the whole of the CENVAT credit available on the last day of the month under consideration for payment of duty on goods cleared during that month, with only the balance payable in cash. The material on record showed that the assessee had not possessed usable credit during the earlier months due to completion of procedural formalities and availability of duty-paying documents, and that the credit which became available in December 2005 was first exhausted before the balance duty was paid in PLA. The condition attached to the notification was thus satisfied on the facts, and the contrary view taken by the Department on an assumed November closing balance was not accepted.

Conclusion: The assessee was held to have fulfilled the notification condition, and the refund claim was rightly allowed.

Final Conclusion: No question of law arose, and the Revenue's appeal was dismissed.

Ratio Decidendi: Where an exemption notification requires first utilisation of the CENVAT credit available on the last day of the relevant month, compliance is judged by the credit actually available for utilisation in that month, and not by a hypothetical credit balance that was not yet available because procedural formalities were incomplete.

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