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TMI Blog2011 (9) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... V(SMB) - Dated:- 22-9-2011 - Shri P.R. Chandrasekharan, J. REPRESENTED BY : Shri Mayur Shroff, Advocate, for the Appellant. Shri Navneet, A.D.A.R, for the Respondent. [Order]. The appeal is directed against the order-in-appeal No. YDB/84/II/2009, dated 25-9-2009 passed by the Commissioner of Central Excise (Appeals), Mumbai. 2. The facts of the case are that the appellant M/s. Choksi Enterprises are manufacturers of electrical switches, sockets and co-boxes falling under Chapter sub-headings 8536.90 and 8538.00 of the Central Excise Tariff Act, 1985. A show-cause notice dated 30-4-1990 was issued to the appellant that they availed duty exemption on the goods falling under Chapter sub-heading 8538.00 under Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 which was proposed to be recovered from them has already been utilized by them before availing the exemption under Notification No. 144/89 dated 19-5-1989. When the credit was taken and utilized, the goods were liable to duty. Once the credit has been validly taken and utilized, the question of its recovery does not arise when at a later point in time the goods became exempted. He placed reliance on the judgment of Hon ble Apex Court in the case of Collector v. Dai Ichi Karkaria Ltd. reported in 1999 (112) E.L.T. 353 (S.C.). In the said case the Hon ble Apex Court has held as follows :- 17. It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that in a recent case pertaining to Commissioner of Central Excise, Bangalore-II v. TAFE Ltd. reported in 2011 (268) E.L.T. 49 (Kar.) the Hon ble High Court of Karnataka has held as follows :- 9. Therefore it is clear from the aforesaid judgment of the Apex Court that once the input credit is legally taken and utilized on the dutiable final product, it need not be reversed on the final product being exempted subsequently. Only if any products are purchased subsequent to the said exemption and if any tax is paid on such inputs, as the final product is exempted from payment of tax, the assessee would not be entitled to avail the Cenvat credit on such inputs. But the Cenvat credit availed on such inputs till the date of exemption, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e become exempt from excise duty, the Modvat credit on such inputs also becomes inadmissible and will have to be reversed. 5. I have carefully considered the rival submissions. In the Dai Ichi Karkaria Ltd. case (supra), the Hon ble Apex Court had clearly held that once the credit of duty has been taken rightly and has been utilized also rightly, in terms of the provisions of law, then such credit becomes indefeasible and such credit cannot be recovered at a subsequent point of time on the ground that the product has become exempted at a later point of time. The same principle has been followed by the Hon ble High Courts of Himachal Pradesh, Panjab Haryana and also the Hon ble High Court of Karnataka in the cases cited (supra). Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided by the Hon ble Supreme Court and TAFE Ltd. case (supra) decided by the Hon ble High Court of Karnataka. When the credit was taken and utilized the goods were chargeable to excise duty and, therefore, the credit was rightly taken and rightly utilized; only at a later point of time the goods became exempted. Therefore, seeking reversal credit, when subsequently the final product becomes exempt from duty is not sustainable in law. What, at best, can be recovered is the credit which is still lying in the account which has not been utilized and such credit can be lapsed when the product becomes fully exempt from duty. 6. In view of the above position, I set aside the impugned orders and allow the appeal. However, if any duty credit was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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