CENVAT credit on consultancy services remains valid despite later abandonment of the expansion project.

CENVAT credit validly availed on consultancy services for a plant expansion project could not be reversed merely because the project was later abandoned. The record showed the credit was rightly taken and utilised during the relevant period, and subsequent abandonment did not retrospectively make the credit irregular or create a reversal liability. Regular disclosure in returns also supported the assessee's position. The demand was therefore unsustainable, and the assessee succeeded.

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Issues: Whether CENVAT credit taken on consultancy services for a proposed expansion project was liable to reversal when the project was later abandoned.

Analysis: The consultancy service was availed for the plant expansion project and the credit was taken and utilised during the relevant period. The record did not show that the credit was wrongly availed when taken. Once credit is rightly availed, a later decision to abandon the project does not retrospectively make the credit irregular or create a liability to reverse it. The appellant had also been filing regular returns disclosing the credit, and the reasoning adopted in prior decisions supported the view that subsequent events cannot vitiate otherwise valid credit.

Conclusion: The credit was not liable to reversal and the demand could not be sustained; the finding was in favour of the assessee.

Ratio Decidendi: CENVAT credit validly availed on input services cannot be denied or reversed merely because the underlying project is subsequently abandoned.

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