CENVAT credit availed on capital goods — Goods destroyed by fire after availment and utilisation of such credit — Insurance claim paid by the insurance authority covered central excise duty — Revenue sought to recover the CENVAT — Held, Reversal can be sought only if the availment irregular — Appeal dismissed.

The respondent bought certain capital goods on payment of excise duty on the same. The duty portion was claimed as CENVAT credit and thereafter, the same was utilised for the discharge of duty liability on goods cleared. Five years thereafter, the goods got destroyed in fire. The respondent purchased new capital goods and put forward claim to the insurance company in terms of the insurance policy subscribed by them. The insurance company reimbursed the cost of goods including the excise duty element on the same. The Revenue directed the assessee to reverse the CENVAT credit on the ground that the assessee had double benefit. The substantial questions of law were

(a) whether the assessee was eligible to claim credit on goods which were claimed to be destroyed in fire and for which the insurance company had compensated equivalent value of goods along with duty, and

 (b) whether the Tribunal’s order encouraged unjust enrichment.

Held:

Citing the judgment in case of CCE, Pune v. Dai Ichi Karkaria Ltd. reported in (1999) 112 ELT 353 (SC), the Court held that there is no provision in the rules which provides for the reversal of the credit by the Excise Authorities except where it has been irregularly taken. Merely because the insurance company paid the assessee the value of goods including the excise duty paid, that would not render the availment of the CENVAT credit wrong or irregular. The appeal of the Department was dismissed.