Reversal of CENVAT credit treated as non-availment, preserving exemption entitlement under conditional notification terms.

Reversal of CENVAT credit on furnace oil was treated as satisfying an exemption notification condition requiring that no credit be taken on inputs or capital goods used in manufacture. Because the assessee had not availed credit on any other input or capital goods, the later reversal of the furnace oil credit was regarded as equivalent to non-availment. On that basis, the exemption condition was held to be complied with, and the assessee remained entitled to the exemption.

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Issues: Whether reversal of CENVAT credit taken on furnace oil satisfied the condition in the exemption notifications requiring non-availment of credit and preserved the assessee's entitlement to exemption.

Analysis: The notifications in question were conditional upon no credit being taken in respect of inputs or capital goods used in manufacture. The assessee had taken credit only on furnace oil and had not availed credit on any other input or capital goods. The credit taken on furnace oil was later reversed. On these facts, the condition attached to the notifications was treated as complied with, since reversal was regarded as equivalent to non-availment of credit.

Conclusion: The condition of the exemption notifications stood satisfied after reversal of the credit, and the assessee remained entitled to the exemption.

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