CENVAT credit utilisation across factory divisions allowed where rules permit use of input credit for other final products.

The proviso to Rule 57F(12) of the Central Excise Rules, 1944 allowed credit on specified inputs received and used in the factory on or after 1 March 1997 to be utilised against duty on any other final product, even where the input was not actually used in that product. Rule 57AB(1B) likewise permitted use of CENVAT credit for duty on final products manufactured by the same manufacturer. Separate sugar and distillery divisions within one factory did not, by itself, defeat that entitlement. A Board circular could not override the rule, and the cited precedents supported the assessee's right to transfer and utilise the molasses credit for duty on sugar.

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Issues: Whether credit of duty paid on molasses accumulated in the distillery division could be transferred and utilised towards payment of duty on sugar cleared from the sugar division, despite the divisions being distinct and the department relying on the Board circular.

Analysis: The proviso to Rule 57F(12) of the Central Excise Rules, 1944, contained a non obstante clause and permitted credit on specified inputs received and used in the factory on or after 1 March 1997 to be utilised towards duty on any other final product, even if the input was not actually used in that final product. The subsequent provision in Rule 57AB(1B) similarly enabled utilisation of CENVAT credit for duty on final products manufactured by the manufacturer. The existence of separate sugar and distillery divisions within the same factory did not, by itself, deny the benefit. The Board circular relied upon by the Revenue could not override the Tribunal's interpretation of the rule, and the cited precedents supported the assessee's entitlement.

Conclusion: The assessee was entitled to utilise the molasses credit for payment of duty on sugar, and the Revenue's objection failed.

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