CENVAT credit on conversion to a 100% Export Oriented Unit remains usable and need not be reversed.

A DTA unit converted into a 100% Export Oriented Unit was not required to reverse the balance CENVAT credit standing in its books on the date of conversion, and the credit could be utilised for clearances from the converted unit. The Tribunal's view was sustained because earlier Tribunal decisions had held that such credit remains available after conversion, those decisions had been accepted by the Revenue, and one supporting ruling had also been left undisturbed by the Apex Court. The settled position therefore supported continuation and utilisation of the credit in favour of the assessee.

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Issues: Whether a DTA unit converted into a 100% Export Oriented Unit was required to reverse the balance CENVAT credit available in its books on the date of conversion and whether such credit could be utilised for clearances from the converted unit.

Analysis: The Tribunal had allowed the assessee to carry forward and utilise the balance credit on conversion, relying on earlier Tribunal decisions holding that such credit remains available after conversion. Those decisions had been accepted by the Revenue, and the appeal against one of the supporting decisions had also been dismissed by the Apex Court. In view of this settled position, no infirmity was found in the Tribunal's view.

Conclusion: The assessee was not required to reverse the balance CENVAT credit on conversion and was entitled to utilise it; the question was answered in favour of the assessee.

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