CENVAT credit need not be reversed when a dutiable final product later becomes exempt.

CENVAT credit validly taken and utilised when the final product was dutiable did not require reversal merely because the product later became exempt from duty. The analysis followed the Larger Bench ruling in HMT, applying the Supreme Court decision in Dai Ichi Karkaria to hold that legally availed credit remains protected despite a subsequent exemption. The appeal was dismissed.

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Issues: Whether input credit validly taken and utilised when the final product was dutiable is required to be reversed merely because the final product subsequently became exempt from duty.

Analysis: The dispute was held to be covered by the Larger Bench ruling in HMT, which applied the Supreme Court decision in Dai Ichi Karkaria and concluded that credit legally taken and utilised on a dutiable final product does not have to be reversed on the product becoming exempt later.

Conclusion: The credit was not required to be reversed on the subsequent exemption of the final product, and the appeal was dismissed.

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