Deferred utilisation of eligible CENVAT credit is permissible where no time limit is prescribed, defeating excess utilisation demand.

Rule 6(3)(c) of the CENVAT Credit Rules, 2004 did not require the eligible 20% credit to be utilised within any fixed period, so unutilised credit could be carried forward and used later for payment of service tax. The authority's own view that credit unutilised as on 31.3.2005 would not lapse supported deferred utilisation, and the cited case law also favoured that reading. On that basis, a demand founded on alleged excess utilisation was unsustainable, and the appeal succeeded with the impugned order set aside.

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Issues: Whether unutilised CENVAT credit attributable to the eligible 20% limit could be utilised in a later period for payment of service tax, and whether the demand confirmed on the footing of excess utilisation was sustainable.

Analysis: Rule 6(3)(c) of the CENVAT Credit Rules, 2004 did not prescribe that the 20% credit earned had to be utilised within a particular period. The authority's own finding that unutilised credit as on 31.3.2005 would not lapse and could be used for future service tax payments was inconsistent with the conclusion that later utilisation was barred. The cited case law also supported the assessee's position that deferred utilisation of eligible credit was permissible.

Conclusion: The demand based on alleged excess utilisation was unsustainable and the issue is decided in favour of the assessee.

Final Conclusion: The appeal succeeds and the impugned order is set aside, with consequential relief as permissible in law.

Ratio Decidendi: Where the governing CENVAT provision does not impose a temporal restriction, eligible credit not utilised in one period may be carried forward and used later for tax payment.

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