Vested MODVAT credit could not be withdrawn by later notification, and prior binding remand order controlled the dispute.

Credit validly earned under the MODVAT scheme was treated as a vested and indefeasible right, so a later notification could not be applied to withdraw accrued credit on capital goods already purchased, installed, and duty-paid before the notification date. The Court also treated its earlier unchallenged remand order as binding between the parties, preventing lower authorities from reopening the issue on the ground that the controversy was different. The Tribunal's non-speaking order was therefore not justified, and the relief granted to the assessee was restored.

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Issues: Whether the Tribunal was justified in setting aside the benefit of MODVAT credit and whether the notifications issued on 01.08.1997 could be applied to take away credit already accrued on capital goods purchased and installed before that date.

Analysis: The earlier Division Bench order had remitted the matter with directions to decide the excise duty liability in the light of the Supreme Court ruling on accrued credit. The Court treated that earlier order, which had not been challenged by the Department, as conclusive on the issue between the parties. It held that lower authorities could not disregard the binding effect of the High Court's earlier decision or the Supreme Court's law by questioning the similarity of the controversy. On merits, the Court accepted the settled principle that credit validly earned under the MODVAT scheme is a vested and indefeasible right and cannot be withdrawn by a subsequent notification so as to affect capital goods on which duty had already been paid and credit had already been taken. The Tribunal's order was also found to be non-speaking and unsupported by reasons.

Conclusion: The Tribunal was not justified in reversing the relief granted to the assessee. The notifications could not be applied to divest the accrued credit, and the assessee succeeded.

Final Conclusion: The impugned order of the Tribunal was set aside and the orders of the original authorities granting relief to the assessee were restored.

Ratio Decidendi: Credit validly accrued under the MODVAT scheme constitutes a vested right that cannot be taken away by a subsequent notification or administrative reversal, especially where the controversy has already been concluded by an earlier binding decision between the parties.

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