Accrued CENVAT credit cannot lapse absent express wording; later notification applied prospectively and credit was allowed.

CENVAT credit on input services received before 01.03.2006 remained admissible when taken on 01.04.2006, because the credit had already accrued under the earlier regime. Rule 4(7) of the CENVAT Credit Rules, 2004 allowed availment on the date of payment, and Notification No. 1/2006-ST contained no express provision lapsing credit already earned on prior services. The later notification was therefore applied prospectively and could not destroy vested credit rights. The disallowance was set aside and the assessee's entitlement to the credit was upheld.

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Issues: Whether CENVAT credit on input services received before 01.03.2006 could be validly taken on 01.04.2006 after the issue of Notification No. 1/2006-ST.

Analysis: The credit related to input services received during the period when the assessee was entitled to the benefit of the earlier notification. Rule 4(7) of the CENVAT Credit Rules, 2004 permitted availment of credit on the date of payment, and the subsequent notification contained no express provision stating that credit already accrued on prior services would lapse. The existing credit was therefore treated as an accrued and vested entitlement, and the later notification was read as operating prospectively, not as destroying accumulated credit already earned under the earlier regime.

Conclusion: The credit taken on 01.04.2006 for input services received prior to 01.03.2006 was held to be admissible, and the disallowance was set aside in favour of the assessee.

Ratio Decidendi: In the absence of an express lapsing provision, credit lawfully accrued under the earlier regime cannot be denied merely because a subsequent notification imposes a prospective restriction.

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