Deemed credit earned before scheme withdrawal cannot lapse merely because it remained unutilized in the credit account.

Deemed credit lawfully earned under the rescinded scheme cannot be denied or treated as lapsed merely because it remained unutilized in the Cenvat Credit Account. The settled precedent applied to credit earned up to 31.03.2003, and the disallowance of such balance was held unsustainable. On that basis, the Revenue's challenge failed and the Commissioner (Appeals)' order was left undisturbed.

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Issues: Whether the deemed credit earned and lying unutilized in the Cenvat Credit Account prior to withdrawal of the deemed credit scheme could be disallowed or treated as lapsed.

Analysis: The assessee had availed deemed credit under Notification No. 52/2001-C.E. (N.T.) before the scheme was rescinded. The credit balance remained in the Cenvat Credit Account. The issue was already covered by precedent holding that deemed credit earned up to 31.03.2003, before withdrawal of the scheme, could not be lapsed. In view of that settled position, the order of the Commissioner (Appeals) did not call for interference.

Conclusion: The disallowance of the unutilized deemed credit was not sustainable and the Revenue's challenge failed.

Ratio Decidendi: Deemed credit lawfully earned before withdrawal of the scheme cannot be denied or treated as lapsed merely because it remained unutilized in the credit account.

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