CENVAT credit on moulds and dies sent for repair need not be reversed where duty on clearance equals or exceeds the credit taken.

Credit on moulds and dies received for repair was not required to be reversed under Rule 16 of the CENVAT Credit Rules, 2002 because duty had been paid on receipt and the repaired goods were cleared on payment of duty equal to or more than the credit availed. The Tribunal treated the movement as falling within the entitlement recognised by Rule 16, and held that the assessee was not liable to reverse the credit. The denial of credit was therefore set aside in favour of the assessee.

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Issues: Whether credit taken on moulds and dies received for repair was required to be reversed under Rule 16 of the CENVAT Credit Rules, 2002 when duty was paid on receipt and duty equivalent to or more than the credit availed was discharged on clearance after repair.

Analysis: The goods were received from the assessee's own unit for repair, duty was paid on the invoices at the time of receipt, and credit was taken accordingly. The duty payable on the repaired goods was discharged on the basis of the cost of the moulds and dies plus value addition. Since the assessee was discharging duty equal to or more than the credit availed, the situation fell within the entitlement recognised under Rule 16 of the CENVAT Credit Rules, 2002, and no reversal of the credit was warranted.

Conclusion: The requirement to reverse the credit did not arise, and the denial of credit was set aside in favour of the assessee.

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