Cenvat credit under Target Plus and DEPB schemes requires actual duty payment; mere pass book debit is insufficient.

Cenvat credit under the Target Plus/DEPB scheme was held inadmissible where the duty amount was only debited in the pass book, because such debit did not amount to actual duty payment in the manner required by the exemption structure. The Tribunal followed the settled Larger Bench view and subsequent High Court decisions that credit is available only when duty has been actually paid as required by the scheme. The lower appellate authority's allowance of credit on that basis was therefore erroneous, and the assessee's claim failed.

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Issues: Whether Cenvat credit was admissible merely because the duty amount stood debited in the pass book under the Target Plus/DEPB scheme.

Analysis: The issue was treated as settled by the Larger Bench and followed by subsequent High Court decisions. The governing principle applied was that credit under the scheme is available only where duty has actually been paid in the manner required by the exemption structure. Where goods are cleared on debit of the pass book or similar scrip mechanism, the transaction does not amount to payment of duty in cash so as to support credit eligibility. The Tribunal held that the lower appellate authority had accepted credit on an erroneous basis.

Conclusion: Cenvat credit was not admissible on the basis of mere debit entry in the pass book, and the assessee's claim failed.

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