Accrued money credit survived rescission of the scheme where ethyl alcohol was received before the cut-off date.

Money credit on ethyl alcohol accrued on receipt of the goods, and State Excise gate passes showed receipt before 1-4-1994. The rescission of the money credit notification from that date did not extinguish credit already earned, because withdrawal of the scheme barred only fresh accrual after the cut-off date. On that basis, duty demand and penalty under Rule 173Q(1)(PP) were not sustainable, and the credit was treated as validly availed.

---

---

Issues: Whether money credit on ethyl alcohol could be utilised when the goods had been received before 1-4-1994, though the relevant notification rescinding the money credit scheme came into force on 1-4-1994, and whether the duty demand and penalty could therefore be sustained.

Analysis: The credit was found to have accrued on receipt of the goods, and the State Excise gate passes established receipt of the ethyl alcohol before 1-4-1994. The rescission of the money credit notification did not take away rights already accrued before its withdrawal. The finding was supported by the principle that withdrawal of a scheme prevents fresh accrual after the cut-off date but does not extinguish credit already earned. In view of this, the basis for confirming duty and imposing penalty under Rule 173Q(1)(PP) of the Central Excise Rules was not made out.

Conclusion: The credit was held to be validly availed and the duty demand and penalty were set aside in favour of the assessee.

---