Modvat credit reversal must await decision on pending transitional credit claim under Rule 57H.

The demand for reversal of Modvat credit on inputs in stock and in process was not to be enforced until the assessee's pending application for transitional credit under Rule 57H was decided. The Tribunal accepted that the reversal claim had to be adjusted against the transitional credit sought, and therefore directed that the Rule 57H application be determined first. The Department's appeal was accepted only to that extent, preserving enforcement of the demand subject to the outcome of the transitional credit claim.

---

---

Issues: Whether the demand for reversal of Modvat credit on inputs in stock and in process could be enforced before deciding the assessee's pending application for transitional credit under Rule 57H.

Analysis: The dispute arose after the final products became exempt and the Department sought reversal of Modvat credit under Rule 57I. The Tribunal noted the Department's own prayer that the demand should be enforced only after the pending Rule 57H application was decided. In view of the admitted position that the demand had to be adjusted against the transitional credit claimed, the Tribunal found it to direct that the Rule 57H claim be decided first.

Conclusion: The demand was to be enforced only after disposal of the pending Rule 57H application, and the Department's appeal was accepted to that extent.

---