Capital goods Cenvat credit remains admissible despite later exemption of the final product, absent express statutory withdrawal.

Capital goods Cenvat credit already validly earned remains available unless the statute expressly withdraws it, and a later exemption of the final product does not by itself justify denial or reversal of the balance credit. The dispute concerned only whether the remaining credit could be taken in a subsequent year after the final product became exempt from duty; the settled principle applied was that accrued credit cannot be defeated merely by subsequent change in the taxability of the output. On that basis, the balance Cenvat credit was held to be admissible.

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Issues: Whether the appellant was entitled to avail the remaining capital goods Cenvat credit in the subsequent year when the final product had become exempt from duty.

Analysis: The credit already earned on capital goods was not in dispute. The dispute was confined to denial of the balance credit solely because the final product had become exempt from duty. The Tribunal accepted the settled principle that credit validly earned cannot be denied unless the law specifically takes away that right, and that subsequent exemption of the final product does not by itself justify reversal of such credit.

Conclusion: The appellant was entitled to the balance Cenvat credit on capital goods.

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