Cenvat credit on destroyed goods need not be reversed where remission of duty is granted and refund remains admissible.

Cenvat credit on inputs used in finished goods destroyed after remission of duty was not required to be reversed, because remission of duty is not equivalent to exemption and the Board's clarification supported retention of credit where remission is granted. Applying the Larger Bench view in Grasim Industries, the assessee's reversal was held unnecessary. The refund claim filed after reversal was also admissible because it was within the prescribed time, and the objection based on failure to separately challenge the remission condition was rejected since an order granting remission is not the same as an order of assessment.

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Issues: Whether the assessee was required to reverse Cenvat credit on inputs used in finished goods that were destroyed after remission of duty, and whether the refund claim filed after such reversal was admissible.

Analysis: The remission of duty on the finished goods had already been upheld. The clarification issued by the Board stated that credit on inputs going into destroyed goods, where remission is granted, need not be reversed. The Larger Bench view in Grasim Industries was followed to hold that remission of duty on finished goods cannot be equated with exemption from duty. The reversal made by the assessee was therefore not required. The refund claim was filed within the prescribed time. The objection that the remission condition was not separately challenged was rejected because the remission condition itself was not legally sustainable, and an order granting remission cannot be equated with an order of assessment.

Conclusion: The assessee was not liable to reverse the credit, and the refund claim was admissible.

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