Transitional credit of capital goods cannot rest on an overruled precedent and may require fresh adjudication.

Transitional credit of capital goods was examined in the context of exempt final products, with the Tribunal having allowed the claim by relying on an earlier coordinate decision. That basis was later displaced because the cited decision had already been overruled by a larger bench, so the Tribunal's reasoning could not be sustained without applying the correct legal position. The order was quashed and set aside, and the matter was remanded for fresh decision in accordance with law.

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Issues: Whether transitional credit of capital goods was admissible when the final product was exempt from duty and whether the Tribunal's allowance of such credit, based on a decision later overruled by a larger bench, could be sustained.

Analysis: The Tribunal had allowed the assessee's claim by following an earlier coordinate decision. It was brought to notice that the said decision had already been overruled by a larger bench, and the Tribunal's order therefore could not stand without reconsideration in the light of the correct legal position.

Conclusion: The Tribunal's order was quashed and set aside and the matter was remanded to the Tribunal for fresh decision in accordance with law.

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