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TMI Blog2017 (3) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... 5509.50), Woolen Yarn (5107.11) Polyester Tops (5506.20), Poly Wool Grey Fabrics (5513.10), Poly Wool finished fabrics (5513.29), Woolen Grey Fabrics (5111.10) and Woolen Finish Fabrics (5111.29). The appellants are availing cenvat credit on the various inputs. The department observed that the appellant after having availed the cenvat credit on the inputs were clearing the finished product for export on payment of duty at the effective rate in terms of notification no. 29/2004-CE dated 09.07.2004. The exports on payment of duty, by debiting duty from cenvat account under claim of rebate; at the same time, the appellant were also clearing their above said final products for home consumption without payment of central excise duty under exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the goods cleared under exemption notification no. 30/2004-CE has been reversed before or at the time of clearance of such exempted goods. He submits that at the time of receipt of inputs it is not known that how much quantity of the input will be used in the exempted goods and how much will be used in the dutiable goods. Therefore the only way out to comply with the condition of non-availment of cenvat credit is by reversing the cenvat credit attributed to the exempted goods. He submits that on the very same issue various judgments were passed, according to which the method adopted by the appellant has been endorsed and the exemption was allowed. He placed reliance on the following various circulars and judgments of the various forums: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of duty demand is sustainable, the adjudicating authority wrongly refrained from imposing penalty. Therefore, revenue s appeal deserves to be allowed. 4. We have carefully considered the submission made by both sides. We find that after issuance of show-cause notice and adjudication of the case, there has been important development on the legal issue. Since there was a practical difficulty that for a manufacturer to manufacture and clear goods dutiable under notification no. 29/2004-CE as well as under exemption notification no. 30/2004 it was not possible to segregate the inputs. At the time of receipt of inputs, it is not known to the assessee how much quantity is used in the exempted goods and how much in dutiable goods. Considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of reversal of credit we quote hereinbelow the following para from the judgment of this Court in Collector of Central Excise v. Dai Ichi Karkaria Ltd. reported in 1999 (112) E.L.T. 353. (S.C.) "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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, they would be ineligible for exemption under this notification. Reversal of credit at a later date would not make them eligible for this exemption. The Hon ble Supreme Court in the case of CCE, Mumbai-I v. M/s. Bombay Dyeing Ltd. [2007 (215) E.L.T. 3 (S.C.) = 2007-TIOL-141-SC-CX] has discussed this issue. References have been received to re-examine the said circular in light of the decision the Supreme Court. 2. The matter has been examined. In para-8 of the above referred Supreme Court decision, it has been held that even when credit is taken, if the entry is reversed before utilization, it would amount to not taking credit. Accordingly, it has been ruled that in such cases, the benefit of the Notification cannot be denied. This judg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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