Abatement exemption and Cenvat credit reversal: reversal was treated as curing non-availment and preserving exemption eligibility.

Abatement exemption under Notification No. 01/2006-ST was treated as available where Cenvat credit had been taken but later reversed. The operative reasoning was that reversal of the credit restores compliance with the notification condition requiring non-availment of Cenvat credit. A contrary view based on an earlier High Court decision was not accepted because the Supreme Court authority on the same issue was followed. On that basis, the assessee was held entitled to the abatement exemption and the demand was dropped.

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Issues: Whether abatement exemption under Notification No. 01/2006-ST was available where Cenvat credit had been availed but was subsequently reversed.

Analysis: The condition in the exemption notification requiring non-availment of Cenvat credit was held to be satisfied where the credit taken had been reversed. The decision relied on the view that reversal of credit restores compliance with the notification condition, and the contrary reliance on an earlier High Court decision was not accepted in view of the Supreme Court authority on the identical issue.

Conclusion: The assessee was entitled to the abatement exemption, and the demand was correctly dropped.

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