Accrued excise credit survives scheme change where no express provision extinguishes vested entitlement to transfer old register balance.

Accrued unutilised excise credit standing in the old register on 28 February 1986 in respect of oils and coolants was not treated as lapsed merely because those inputs were not then listed under the Modvat scheme. The analysis states that, in the absence of any express provision in the Modvat framework or valid rule-making power under Section 37 of the Central Excise Act to extinguish existing credit, the balance represented an accrued right. That right could therefore be carried forward and transferred to the new RG 23A Part II Register.

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Issues: Whether the accumulated unutilised credit lying in the old register on 28 February 1986 in respect of oils and coolants could be treated as lapsed and denied transfer to the new Modvat register under Rule 57H(3) of the Central Excise Rules, 1944.

Analysis: The credit had accrued under the then existing set-off regime and there was no express provision in the Modvat framework declaring such unutilised credit to have lapsed. The absence of a statutory power under Section 37 of the Central Excise Act, 1944 to frame a rule extinguishing accrued credit meant that the assessees' existing entitlement could not be taken away merely because oils and coolants were not then listed as Modvat inputs. In the absence of a validating enactment, the balance credit continued to represent an accrued right capable of being transferred to the new register.

Conclusion: The credit did not lapse and the Petitioners were entitled to transfer the accumulated credit to the new RG 23A Part II Register.

Ratio Decidendi: Accrued unutilised credit under an existing excise scheme is a vested right that cannot be extinguished or treated as lapsed without an express statutory provision or validating legislation.

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