Credit reversal on removal of capital goods is limited to the credit taken, not the duty rate on clearance.

On removal of moulds or other input-capital goods after credit had been availed, duty liability was governed by the credit provisions requiring payment of an amount equal to the credit taken. The prevailing duty rate on the date of clearance did not create any additional liability where that credit-based amount had already been paid. On that interpretation, the demand for differential duty was not sustainable, and relief followed for the assessee.

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Issues: Whether, on clearance of moulds/input-capital goods on which credit had been taken, duty was payable only to the extent of the credit availed or at the rate prevailing on the date of clearance.

Analysis: The dispute turned on the interpretation of the relevant credit provisions governing removal of inputs or capital goods after availment of credit. The reasoning accepted that the controlling requirement was payment of an amount equal to the credit taken, and that the prevailing rate of duty at the time of clearance did not justify a further demand once such amount had been paid.

Conclusion: The demand for differential duty was not sustainable and the assessee was entitled to relief.

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