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2017 (1) TMI 1184 - AT - Central ExciseReversal of CENVAT credit - whether the respondent was required to reverse the credit on inputs in stock which were lying in their factory at the time of opting the area based exemption under N/N. 50/2003-CE dated 10.6.2003 or not? Held that - The issue has already been resolved by this Tribunal in the case of Himachal Futuristic Communications Ltd. 2016 (11) TMI 628 - CESTAT CHANDIGARH , where it was held that when the input-credit legally taken and utilised on the dutiable final products, need not be reversed on the final product becoming exempt subsequently unless specific provision exist therefor - At the time opting area based exemption of Notification No.50/2003-CE dated 10.6.2003, the appellants are not required to reverse the credit in their cenvat credit account lying unutilized. Appeal dismissed - decided against Revenue.
Issues Involved:
Whether the appellant was required to reverse the credit on inputs in stock when opting for area-based exemption under Notification NO.50/2003-CE dated 10.6.2003. Analysis: The key issue in this case was whether the appellant had to reverse the credit on inputs in stock when they opted for the area-based exemption under Notification NO.50/2003-CE dated 10.6.2003. The Tribunal referred to previous judgments to resolve this matter. The Tribunal observed that when the input credit was legally taken and utilized on dutiable final products, there was no requirement to reverse the credit when the final product became exempt later. This position was supported by various decisions of different benches and high courts. The Tribunal emphasized that the law was correctly enunciated in the case of TAFE Ltd. v. CCE, Bangalore, and ruled in favor of the assessee and against the Revenue. The Tribunal also considered the judgment of the Hon'ble High Court of Himachal Pradesh in the case of United Vanaspati Ltd. The High Court's observation regarding the reversal of Modvat credit under Central Excise Rules, 1944, was noted. The Apex Court's interpretation highlighted that once credit was validly taken, it was indefeasible and could not be reversed unless illegally or irregularly obtained. The Tribunal further compared Rule 57H(5) of the Excise Rules with Rule 9(2) of the Cenvat Rules, noting their identical language and implications. Moreover, the Tribunal discussed the judgments of other high courts, such as the High Court of Kerala and the High Court of Rajasthan, which upheld similar views favoring the assessee. The consistent interpretation of the rules and judgments indicated that even if the final product was exempt from excise duty, the appellant was not required to reverse the Modvat credit already taken. The Tribunal reiterated that the language of Rule 9(2) of the Cenvat Rules mirrored that of Rule 57H(5) of the Excise Rules, leading to a similar decision outcome. The Tribunal also referenced the examination of the issue by the Hon'ble High Court of Himachal Pradesh in the case of Ranbaxy Laboratories Ltd. and Saboo Alloys Pvt. Ltd., where the courts ruled in favor of the assessee based on the interpretation of relevant provisions and previous judgments. The Appellate Authority's failure to appreciate the legal precedents was noted, and the Tribunal upheld the decision in favor of the appellants, stating that they were not required to reverse the credit in their cenvat credit account when opting for the area-based exemption under Notification No. 50/2003-CE dated 10.6.2003. In conclusion, the Tribunal found no infirmity in the impugned order and upheld it, dismissing the appeal filed by the Revenue.
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