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TMI Blog2012 (4) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... t or until those goods existed - decided in case Collector of Central Excise, Pune and others vs. Dai Karkaria Ltd. and others (1999 - TMI - 94220 - CEGAT, NEW DELHI) – in favour of assessee. - Central Excise Appeal No. 8 of 2010 - - - Dated:- 5-4-2012 - R B Misra And Sanjay Karol, JJ For Appellant : M P Devnath and Mr. Rahul Mahajan, Adv For Respondent : Mr. Sandeep Sharma, Assistant Solicitor General of India JUDGEMENT Per : Sanjay Karol, J : Appellants have filed the present appeal against the order dated 30.4.2010, passed by Customs Excise Service Tax Appellate Tribunal, which stands admitted on the following substantial question of law:- The question for consideration that arises in the present case is whether the inputs lying in stock on the date on which the notification exempts the final product is eligible for the credit or not. 2. The appellants are engaged in manufacture of medicament classifiable under Chapters 29 and 30 of the first Schedule of the Central Excise Tariff Act, 1985. The finished goods manufactured by the appellants are sold in domestic and international market. For substantial expansion, appellants set up a unit within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... today. 6. It was urged by the appellants that issue in question, in fact the substantial question of law stands squarely settled and covered by the decisions of this Court in Commissioner of Central Excise, Chandigarh vs. M/s United Vanaspati Ltd., , Commission of C.Ex., Chandigarh vs. Saboo Alloys Pvt. Ltd., 2010 (249) E.L.T. 519 (H.P.) , and as such, the impugned orders dated 17.11.2006 and 30.4.2010 need to be set aside. 7. On the other hand, learned Assistant Solicitor General of India, has tried to distinguish the aforesaid decisions and justify the order passed by the Tribunal below. 8. It is seen that the Division bench of this Court in United Vanaspati Ltd. (supra), was dealing with the following substantial question of law, which we find is similar to the one with which we are dealing:- Whether the Modvat/Cenvat credit involved on the inputs, inputs in process and contained in finished products is liable to be reversed/paid back when the final product becomes exempt from payment of duty. 9. In the said decision after taking into consideration the relevant provisions i.e. Rule 57 of Modvat credit under Central Excise Rules, 1944 and Rule 9(2) of the Cenv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99 (112) E.L.T. 353 (SC) = (1999) 7 SCC 448. 13. It would be worthwhile noticing that while relying upon the decision of Apex Court in Dai-Ichi Karkaria Ltd. (supra), this Court in United Vanaspati Ltd., (supra), has held:- The short question which arises for decision is whether a manufacturer who has obtained credit of the Central Value Added Tax paid by him in respect of the raw material and inputs lying in stock or in process or contained in the final product lying in stock is required to refund/repay the credit when the final product is exempted from excise. The main argument of Sh.Sandeep Sharma, learned Assistant Solicitor General of India is that the authorities below have not taken into consideration Rule 9(2) of the Cenvat Rules. A show cause notice was issued to the assessee on 31.1.1997 asking it to reverse the Modvat credit of Rs.93,584/- on the inputs in hand and in process as well as on the inputs contained in the final product as on 23.7.1996. The undisputed facts of the case are that the assessee is engaged in the manufacture of vegetable products and was taking credit of the duties paid on the inputs used in the manufacture of final products. The fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods lying in stock on the date when such option is exercised and after deducting the said amount from the said amount from the balance, if any, lying in his credit, the balance, if any, still remains shall lapse and shall not be allowed to be utilized for payment of duty on excisable goods, whether cleared for home consumption or for export. After considering the Rule 57, the Apex Court held as follows:- 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 the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the rules which provides for a reversal of the credit by the Excise Authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilized, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called. This is also suggestive of the fact the relevant date for considering exemption from duty of the end product in or in relation to which inputs are used is the date of its receipt in factory and condition is its actual use in or in relation to manufacture of end product by the manufacturer. The chargeability to duty or non-chargeability due to exemption or notified nil rate is to be considered at the stage before goods are actually produced, but on receipt of inputs intended to be used in manufacture of such goods. That being so ultimate clearance of goods at nil rate due to contingency existing at the time of removal does not affect the entitlement that legally arises long before that date. 14. We are in respectful agreement with the judgment of the Kerala and Rajasthan High Courts. Since the language of Rule 9(2) of the Cenvat Rules is identical to that of Rule 57H(5) of the Excise Rules, we feel that the interpretation given by the Apex Court has to apply in the present case also and, therefore, even though the final product may be exempt from payment of excise, the assessee cannot be asked to reverse the Modvat credit already taken by it. 15. Thus the findings ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and applying it to goods manufactured prior to 16.3.1995, on which duty already stood paid and credit facility availed of for the purpose of manufacture of further goods. 19. We also find that not only this Court but other High Courts have also taken a similar view while deciding the similar and/or identical substantial question of law. Following decisions are referred to in this regard:- i. CCE vs. Premier Tyres Ltd., 2001 (130) ELT 417 (Ker); ii. TAFE Limited (Tractor Division) vs. CCE, 2007 (210) ELT 571 (Tru.-Bang.) ; iii. Hindustan Zinc Ltd. vs. CCE, 2008 (223) ELT 149 (Raj); iv. CCE vs. CNC Commercial Ltd., 2008 (224) ELT 239 (P H); and v. CCE vs. Apco Pharma Ltd., (2011) 33 STT 491 (Uttrakhand). 20. We see no reason to either distinguish or differ with the view already taken by this Court. The decisions are squarely applicable to the instant facts as the substantial question of law already stands settled. 21. Hence, in our considered view the impugned orders dated 17.11.2006 and 30.4.2010 being erroneous and perverse are liable to be set aside. Ordered accordingly. Substantial question of law is answered in favour of the assessee and against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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