2005 (12) TMI 27 - AT - Central Excise

Central Excise Cenvat credit Credit already taken and utilised need not be reversed and credit benefit available to manufacturer without any limitation in time

Summary

Issues:
Revenue's appeal against Orders-in-Appeal passed by Commissioner of Central Excise (Appeals), Guntur regarding irregular Cenvat credit utilization for exempted final products.

Analysis:
The respondents, as manufacturers of fruit pulp/concentrate, were availing Cenvat credit for inputs/packing material despite the final products being exempted from duty since 25-7-1991. The Revenue sought reversal of irregularly utilized Cenvat credit. The original authority accepted respondents' contentions based on precedent cases. However, Revenue appealed to the First Appellate Authority, which upheld the lower authority's decision citing a Tribunal case affirmed by the Apex Court. Revenue challenged the Orders-in-Appeal on various grounds, including the applicability of Modvat rules and the need for credit reversal upon product exemption.

The Tribunal noted the absence of settled law due to conflicting Supreme Court decisions on similar issues. It referenced a Larger Bench decision that held validly taken and utilized credit need not be reversed upon subsequent product exemption. The Tribunal emphasized the indefeasibility of such credit and the lack of a time limitation for its use. It distinguished a Two-Members Bench decision cited by Revenue, asserting the precedence of the Five-Members Bench decision affirmed by the Apex Court. Consequently, the Tribunal upheld the Orders-in-Appeal, dismissing Revenue's appeals and affirming the decision not to reverse the credit already taken and utilized.

In conclusion, the Tribunal's judgment clarified the application of Cenvat credit rules in cases of product exemption and emphasized the validity and indefeasibility of credit once taken. The decision highlighted the importance of precedent cases and the hierarchy of decisions in resolving conflicting interpretations of law. The judgment provided clarity on the issue at hand, ensuring consistency in the application of Cenvat credit rules for manufacturers of excisable goods.