Retrospective CENVAT credit recovery must stay within statutory limits and reflect actual utilisation before demand is sustained.

Retrospective recovery of CENVAT credit under an exemption notification must remain within the statutory cut-off date and be confined to credit actually liable to be recovered on proper factual computation. Where the demand period extends beyond the permissible terminal date, and the record does not adequately examine actual utilisation of credit and any refund already sanctioned, the recovery basis is defective. The demand for credit and interest is therefore unsustainable if the statutory limit and the appellant's computation are not properly addressed.

---

---

Issues: Whether the demand of recovered CENVAT credit and interest, made under the retrospective amendment to the exemption notification, could be sustained when the demand period extended beyond the statutory cut-off date and the factual calculation of credit utilisation was not properly examined.

Analysis: The retrospective amendment under the Finance Act, 2003 required recovery only of the CENVAT credit availed in respect of inputs used in relation to goods cleared within the notified period. The demand reflected a period extending beyond the permissible terminal date and the record showed that the calculation of recoverable credit had to be made with reference to actual utilisation and the refund already sanctioned. On the facts, the impugned order did not properly address the statutory limit of recovery or the appellant's computation and instead sustained the demand without adequate examination.

Conclusion: The demand and interest could not be sustained in the manner adjudged below, and the appeal succeeded.

Final Conclusion: The impugned order was set aside and the appellant obtained relief against the confirmed recovery.

Ratio Decidendi: A retrospective recovery provision must be applied only within its statutory limits, and a demand based on CENVAT credit requires proper factual determination of the credit actually liable to be recovered.

---