2013 (1) TMI 581 - AT - Central Excise

Reversal of CENVAT Credit - Whether the respondent was required to reverse the Cenvat credit involved in the inputs lying in stock as well as contained in finished goods/semi-finished goods lying in stock as on 9-9-2004, the date when the assessee opted for exemption under Notification No. 50/2003-C.E., dated 10-6-2003 Held that - Following the decision in case of SABOO ALLOYS PVT. LTD. (2009 (12) TMI 125 - HIGH COURT OF HIMACHAL PRADESH) that input credit legally taken and utilised on dutiable final product, need not be reversed on the final product becoming exempt under Notification No. 50/2003-C.E., dated 10-6-2003. In favour of assessee

Summary

Issues:
- Whether the respondent was required to reverse the Cenvat credit on inputs and finished goods/semi-finished goods upon opting for exemption under Notification No. 50/2003-C.E.
- Preference between the decisions of the Hon'ble High Court and the Tribunal.
- Applicability of the decision in the case of Saboo Alloys.
- Consideration of the Larger Bench's decision in the case of HMT and Apco Pharma Ltd.

Analysis:

The main issue in the present appeal was whether the respondent had to reverse the Cenvat credit on inputs and goods upon opting for exemption under Notification No. 50/2003-C.E. The Commissioner (Appeals) allowed the appeal of the respondent, citing the decision of the Hon'ble Himachal Pradesh High Court in the case of Saboo Alloys P. Ltd. The Commissioner held that the input credit was not required to be reversed by the respondent, following the Saboo Alloys case.

The Revenue contended that the Commissioner erred in giving precedence to the High Court's decision over the Tribunal's decision in the case of Ranbaxy Lab. Ltd. The Revenue argued that the Tribunal's decision was subsequent to the High Court's decision and that the Saboo Alloys case was referred to by the Tribunal in its order. However, the Tribunal found no merit in the Revenue's contention, stating that the High Court's decision should be given preference over the Tribunal's decision due to the hierarchy of courts.

Furthermore, the Tribunal addressed the Revenue's reliance on the Ranbaxy Lab. Ltd. case, stating that the Tribunal cannot find faults in the judgments of High Courts. The Tribunal emphasized that if the issue involved is the same, the declaration of law by the High Court must be followed. Additionally, the Tribunal noted that the issue had been decided by the Larger Bench of the Tribunal in the case of HMT and Apco Pharma Ltd., where it was held that input credit legally taken and utilized on dutiable final products need not be reversed upon the final product becoming exempt.

In conclusion, the Tribunal upheld the Commissioner's decision, rejecting the Revenue's appeal. The Tribunal emphasized the precedence of the High Court's decision over the Tribunal's decision and highlighted the relevance of previous decisions by the Larger Bench of the Tribunal in similar matters.