Cenvat credit utilisation is not product-specific and may be used for any final product under the credit rules.

Rule 3(3) of the Cenvat Credit Rules, 2002 permits MODVAT/CENVAT credit earned on inputs for one final product to be used for payment of excise duty on any other final product manufactured by the assessee. The credit is treated as indefeasible and does not require product-wise or input-wise correlation between a particular input and a particular final product. A restriction that segregates the credit account product-wise is contrary to the rule, the settled principle that credit is not tied to a specific product, and the departmental circular recognising unrestricted use of earned credit for any final product.

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Issues: Whether MODVAT/CENVAT credit earned in relation to inputs for one final product could be utilised for payment of duty on any other final product manufactured by the assessee.

Analysis: Rule 3(3) of the Cenvat Credit Rules, 2002 permits utilisation of credit for payment of excise duty on any final product. The credit is indefeasible and there is no requirement of correlation between a particular input and a particular final product. The restriction imposed by the Commissioner, treating the credit account as separate product-wise and input-wise, was contrary to the rule, the binding judicial principle that credit is not tied to a particular product, and the departmental circular recognising unrestricted use of earned credit for any final product.

Conclusion: The restriction on utilisation of credit product-wise was not sustainable and the issue was decided in favour of the assessee.

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