Cenvat credit cross-utilisation for additional excise duty upheld where rules and binding circular permitted it.

Cenvat credit of Basic Excise Duty was treated as usable for payment of Additional Duty of Excise under the governing excise rules, because Rule 57AB(1)(b) allowed credit to be applied against any duty of excise on final products. The statutory scheme and the effect of the deletion of Article 272 supported that cross-utilisation, and the Board's circular clarifying such use was treated as binding on the department while it remained in force. On that basis, departmental recovery of rebate and the challenge to the utilisation were not sustainable, and the demand was not upheld.

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Issues: Whether credit of Basic Excise Duty could be utilised for payment of Additional Duty of Excise under the Additional Duty of Excise (Goods of Special Importance) Act, 1957, and whether the departmental demand to recover rebate and disallow such utilisation was sustainable.

Analysis: Rule 57AB(1)(b) of the Central Excise Rules, 1944 permitted Cenvat credit to be utilised for payment of any duty of excise on final products. The Court treated the amendment as intentional and relied upon the statutory scheme, including the effect of the deletion of Article 272 of the Constitution of India and the Board's circular clarifying that credit of Basic Excise Duty could be used for payment of additional duty of excise. It also held that Board circulars are binding on the department and cannot be ignored or challenged by the revenue while they remain in force. On that basis, the credit used by the assessee for payment of additional duty was held to be permissible.

Conclusion: Credit of Basic Excise Duty was legally utilisable for payment of Additional Duty of Excise, and the revenue's challenge failed.

Final Conclusion: The legal position was affirmed in favour of the assessee, and the orders dropping the demand were sustained.

Ratio Decidendi: Where the governing Cenvat rule permits utilisation of credit for any duty of excise and the Board's binding circular authorises the stated utilisation, the department cannot deny such cross-utilisation or recover the duty paid on that basis.

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