Duty on inputs removed as such is limited to credit actually availed; no demand lies for unavailed credit portion.

On removal of inputs as such to a sister concern, the duty payable is limited to the Cenvat credit actually availed on receipt of those inputs, so no demand can be sustained for a portion on which no credit was taken. As the assessee had availed only 99.6% credit after accounting for transit loss, liability arose only to that extent, and the demand on the remaining 0.4% was untenable. The record also showed that the assessee corrected a quantification error and paid the admitted amount with interest before the show-cause notice.

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Issues: Whether, on removal of inputs as such to a sister concern, duty was payable on the full quantity removed or only to the extent of the credit actually availed at the time of receipt of the inputs, and whether the demand could survive when a part of the amount had been paid suo motu before notice.

Analysis: The amount payable on removal of inputs as such is co-extensive with the credit actually taken on receipt of those inputs. Since the assessee had availed only 99.6% credit by reducing 0.4% towards transit loss, the same proportion alone was required to be paid back on removal. The demand on the remaining 0.4% was therefore untenable because no corresponding credit had been availed. The record also showed that the assessee had corrected a quantification error and paid the admitted amount with interest before issuance of the show-cause notice.

Conclusion: The duty demand on the disputed 0.4% was not sustainable, and the order setting aside the demand was in principle; the revenue's appeal failed.

Ratio Decidendi: Where inputs are removed as such, the duty payable is limited to the credit actually availed on receipt, and no demand can be sustained for a portion of inputs on which no credit was taken.

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