CENVAT credit reversal on removal of inputs as such limits duty to credit availed, excluding Rule 8 valuation.

Removal of inputs as such after CENVAT credit has been taken attracts payment only of an amount equal to the credit availed under Rule 3(4) of the CENVAT Credit Rules. Where the manufacturer has already discharged duty to that extent on removal to its own unit, the Department cannot insist on revaluation under Rule 8 of the Central Excise Valuation Rules read with Section 4(1)(b) of the Central Excise Act. The duty liability is therefore confined to the credit amount, and payment of that amount satisfies the statutory requirement; a demand based on Rule 8 is unsustainable.

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Issues: Whether, on removal of inputs as such to the assessee's own unit, duty was payable only to the extent of CENVAT credit availed under Rule 3(4) of the CENVAT Credit Rules or whether valuation under Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Section 4(1)(b) of the Central Excise Act, 1944 applied.

Analysis: Rule 3(4) provided that when inputs or capital goods on which credit has been taken are removed as such from the factory, the manufacturer shall pay an amount equal to the credit availed in respect of such inputs or capital goods. The assessee had discharged duty equal to the credit availed on the inputs removed as such. In that situation, the Tribunal held that the Department could not insist on valuation under Rule 8 of the Central Excise Valuation Rules for such removal.

Conclusion: The duty liability was confined to the amount equal to the CENVAT credit availed on the inputs removed as such, and the assessee's payment satisfied the statutory requirement. The demand based on Rule 8 was unsustainable and the appeal succeeded.

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