Duty-paid input credit remains available despite later tariff reclassification; reassessment at user end is impermissible.

Credit on chlorinated rubber remained admissible under Notification No. 201/79-C.E. because eligibility depended on the duty-paid status of the inputs when cleared by the manufacturer under Tariff Item 68. A later reclassification to Item 15A did not authorise reassessment at the user's end or convert duly assessed goods into non-duty paid inputs. The demand was unsustainable because the department could not treat the inputs as non-duty paid merely due to subsequent tariff change; if credit was inadmissible, the proper course was to disallow the credit, not reclassify the goods in the appellants' hands.

---

---

Issues: Whether credit taken on chlorinated rubber under Notification No. 201/79-C.E. remained admissible despite its subsequent tariff reclassification and whether duty could be recovered by treating the inputs as non-duty paid.

Analysis: The eligibility under the notification depended on the duty paid on the inputs when they were cleared from the manufacturer under Tariff Item 68. The later change of classification to Item 15A did not authorise reassessment at the user's end or convert duly assessed inputs into non-duty paid goods. The demand proceeded on an erroneous premise that the inputs had lost their duty-paid character merely because credit had been taken and because the tariff entry changed later. The notification continued to apply to inputs already cleared under the earlier tariff entry, and the department's proper course, if credit was found inadmissible, was to disallow the credit and not to reclassify the goods at the appellants' hands.

Conclusion: The appellants were entitled to the benefit of Notification No. 201/79-C.E., and the demand treating the inputs as non-duty paid was unsustainable.

---