CENVAT credit utilisation ceiling allows cross-period adjustment where the overall limit is not breached.

Rule 6(3)(c) of the CENVAT Credit Rules was read as imposing only a ceiling on utilisation of credit towards service tax and not a monthly or quarterly time limit. On that basis, unutilised credit from one period could be adjusted against excess utilisation in another period, provided the overall prescribed ceiling was not exceeded. Applying the assessee's earlier favourable decision, the tribunal held that the apparent excess in some months was not a recoverable breach when the credit position was examined across the relevant period. The demand was set aside and the appeal was allowed with consequential relief.

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Issues: Whether Rule 6(3)(c) of the CENVAT Credit Rules permitted adjustment of unutilised credit in later months, and whether excess utilisation in particular months could be demanded where the overall ceiling was not breached.

Analysis: The provision fixed only a ceiling on utilisation of credit towards service tax payable and did not prescribe any monthly or quarterly time frame for such utilisation. The same assessee's identical issue had already been decided in its favour, and the earlier view was followed. On the facts, the apparent excess in some months could not be treated as a recoverable breach when the credit position was to be examined across the relevant period.

Conclusion: The demand was not sustainable and the issue was answered in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where a rule prescribes only a utilisation ceiling and does not fix a time frame for availing that credit, unutilised credit of one period may be adjusted against excess utilisation in another period so long as the prescribed ceiling is not exceeded overall.

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