Cenvat credit reversal on closure was unwarranted where inputs were validly availed, utilised, and no removal was proved.

Cenvat credit validly availed on inputs and already utilised for payment of duty was not required to be reversed merely because raw material was alleged to remain in the factory on closure and surrender of registration. The Tribunal reiterated that Cenvat credit does not require one-to-one correlation between inputs and final products, and credit may be utilised immediately on availment. As the Revenue produced no evidence that the raw material had actually been removed from the premises, the demand for reversal could not be sustained.

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Issues: Whether the assessee was required to reverse Cenvat credit on raw material allegedly lying in the factory at the time of closure and surrender of registration.

Analysis: The assessee had availed Cenvat credit on inputs used in manufacture and had already utilized such credit for payment of duty on the final product. The claim for reversal rested on the assertion that a quantity of raw material was found in the premises at closure. The Tribunal held that, even assuming the material was available at the time of closure, there was no legal requirement to reverse credit already validly availed and utilized. It reiterated that there is no one-to-one correlation between inputs and final products and that credit can be utilized immediately on availment. The Revenue also failed to produce evidence that the raw material had actually been removed from the premises.

Conclusion: Reversal of Cenvat credit was not warranted, and the demand could not be sustained.

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