2007 (10) TMI 203 - HC - Central Excise

Opted for SSI exemption u/not.08/01 & cleared goods at Nil rate of duty - assessee had correctly utilized the credit when these final products were chargeable to duty - there was no one to one relationship of the inputs used & final products manufactured - It has rightly been held that the credit of duty paid on inputs can t be confined to a particular raw-material to which the credit is related & out of which a final product is manufactured so assessee weren t required to reverse the credit

Summary

Issues:
1. Whether cash payment/PLA is required in the absence of sufficient balance to reverse cenvat credit on inputs when opting out of the cenvat credit scheme.

Analysis:
The case involved the question of whether an assessee was required to pay back/reverse the cenvat credit availed on inputs, inputs in process, and inputs contained in finished goods when opting out of the cenvat credit scheme. The appellant-revenue contended that the assessee was obligated to reverse the cenvat credit, leading to demands being raised against them. The Commissioner (Appeals) upheld a portion of the demand but set aside another part, reducing the penalty imposed. The Commissioner's decision was based on the assessee correctly availing and utilizing the duty credit on inputs for paying duty on final products, as upheld by the Tribunal. The Tribunal also relied on a Supreme Court judgment in a similar case.

The High Court, after hearing arguments, found no legal question warranting admission of the appeal. It noted the factual findings that the assessee had appropriately utilized duty credits on inputs for products subject to excise duty, without a direct correlation between specific inputs and final products. The court agreed that the assessee was not required to reverse the cenvat credit amount. The judgment in Dai Ichi Karkaria's case was deemed applicable and correctly applied. Consequently, the appeals were dismissed as lacking merit, affirming the Tribunal's decision.