2006 (9) TMI 414 - AT - Central Excise

Summary

Issues involved: Interpretation of Rule 12 of Cenvat Credit Rules, 2002 in relation to utilization of Modvat credit on inputs before exemption from central excise duty.

Summary:
The appellant, a manufacturer of Prestressed Cement Concrete Pipes availing Modvat credit on inputs, faced a demand under Rule 12 of Cenvat Credit Rules, 2002 for unutilized credit on inputs when the pipes became exempt from central excise duty. The appellant contended that the credit had been correctly taken and utilized before the exemption, citing precedents like the Supreme Court's decision in C.C.E., Pune v. Dai Ichi Karkaria Ltd. The Tribunal held that Modvat credit is indefeasible, and there is no need for a one-to-one correlation between input credit and final product. Rule 12 was deemed inapplicable as the credit had been legally taken and utilized, irrespective of subsequent exemptions.

Therefore, the appeal was allowed in favor of the appellant, with any consequential relief granted.