Crystallised Modvat credit remained utilisable after withdrawal of the notification, absent any express rule requiring reversal.

Modvat credit lawfully earned on inputs, and already reflected in the assessee's account before withdrawal of the notification, remained utilisable after the benefit was withdrawn. The accepted principle was that once such credit had crystallised into a vested monetary right, it did not lapse merely because the notification granting future credit was rescinded. In the absence of any express provision in the Central Excise Rules requiring reversal or extinguishment of accumulated credit, the assessee's right to use the existing credit was preserved, and the demand and penalty could not be sustained.

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Issues: Whether Modvat credit lawfully earned on inputs could be utilised after the notification withdrawing the Modvat benefit for that commodity.

Analysis: The credit had already been earned and stood reflected in the assessee's account before withdrawal of the facility. The reasoning accepted that such credit, once crystallised into a monetary right, did not cease merely because the notification granting future credit was rescinded. In the absence of any provision in the Central Excise Rules requiring reversal of credit in such a situation, the assessee's right to utilise the already earned credit was preserved.

Conclusion: The assessee was entitled to utilise the credit already earned even after withdrawal of the Modvat benefit, and the demand and penalty could not stand.

Ratio Decidendi: Credit lawfully earned under a prevailing Modvat notification, once crystallised, may be utilised after withdrawal of that notification unless the statute or rules expressly provide for reversal or extinguishment of such credit.

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