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TMI Blog2017 (3) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... : - the credit on such input is admissible to the appellant in terms of Rule 6 of CCR, 2004 - reliance was placed in the case of Godrej Food Vs. CCE [2016 (10) TMI 759 - CESTAT MUMBAI] - appellant is not required to reverse/pay the Cenvat amount attributed to the input contained in finished goods lying in stock as on 1-3-2002 as well as on the input lying in stock as on 1-3-2002 but used in the manufacture and clearances of export goods. Appeal allowed - decided in favor of appellant. - E/2350/06-MUM - A/86029/17/SMB - Dated:- 24-2-2017 - Mr. Ramesh Nair, Member (Judicial) Shri. Rajesh Ostwal, Advocate for the Appellants Shri. Ajay Kumar, Joint Commissioner(A.R.) for the Respondent Order The fact of the case is that appellant are engaged in the manufacture of Bulk Drugs and pharmaceutical falling under Chapter 29 and 30 of Central Excise Tariff Act, 1985. They have filed a refund claim amounting to ₹ 28,60,859/-, ₹ 1,24,252/- and ₹ 11,41,609/- vide their letter dated 6-3-2003, 29-4-2003 and 29-5-2005 respectively on the ground that they have utilized the exempted goods in the manufacture of their final products which have been exported. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted, therefore the appellant is seeking restoration of the above Cenvat credit reversed by them. As regard the input used in the manufacture before 1-3-2002 Cenvat credit was not required to be reversed as held by the larger bench in case of Ashok Iron(supra), though in case of input lying in stock credit was required to be reversed if the same is used in the manufacture of exempted goods. However, in the fact of the present case as regard the input lying in stock, the same was used in the manufacture of exports goods therefore credit was not required to be reversed as export was made under bond/undertaking. In support of his submission, he placed reliance on the following judgments: (a) HMT Vs. CCE 2008 (232) ELT 217 (Tri. - LB) (b) CCE Vs. HMT (TD) Ltd 2010-TIOL-316-HC-P H-CX (c) CCE Vs. Tale Ltd (Tractor Divisor) 2011 (268) ELT 49 (Kars) (d) CCE Vs. Saboo Alloys Pvt. Ltd. 2010 (249) ELT 519 (H.P.) (e) Hindustan Zinc Ltd Vs. UOI 2008 (223) ELT 149 (Raj.) (f) Ranbaxy Laboratories Ltd Vs. CCE 2012 (279) ELT 194 (H.P.) (g) Collector of CE Vs. Dai Ichi Karkaria Ltd 1999 (112) ELT 353 (SC) (h) Ranbaxy Laboratories Ltd Vs. CCE 2010 (253) EL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of the Raghuvar (India) Ltd Vs. CCE[2002(140) ELT 280(T-LB) heavily relied upon by the Revenue, I observed that due to case of Raghuvar(India) Ltd (supra) the judgment of Ashok Iron(supra) has not been departed, for the reason that in case of Ashok Iron it was held that credit on input contained in finished goods lying in stock on date when final product became exempted, need not to be reversed. Raghuvar (India) Ltd(supra) decision applies only in the case that on the date of exemption input on which credit was taken was lying in stock as such therefore Raghuvar (India) Ltd(supra) judgments is not applicable in the present case. 5.3 As regard the Cenvat credit on the input lying in stock but subsequently it was used in the manufacture and clearances of export of goods under bond/undertaking, the credit on such input is admissible to the appellant in terms of Rule 6 of Cenvat Credit Rules, 2004. The judgment relied upon by the Ld. Counsel supports the case of the appellant. On this very same issue this Tribunal in case of Godrej Food Vs. CCE[cestat Order: A/86555/16/SMB dated 2-3-2016] wherein almost all judgments relied upon by the rivals were discusse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 utilised, 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 unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. 7. The learned Departmental Representative very staneously argued interpreting different provisions relating to the Modvat Scheme that availing of Modvat credit was not irrevocable and when subsequently the end product was exempted from duty the entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no corelation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified 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. 13. 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. 14. In view of the above discussion, the question is answered in favour of the assessee and against the Revenue. The appeal is accordingly dismissed. No order as to costs. As regard the specific provision brought under Rule 11(3) of Cenvat Credit Rules, 2004, the same was observed by the Hon ble Madras High Court in case of Tractor and Farm Equipment Ltd (supra) wherein it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the final goods become exempt from payment of duty, for the inputs received on and after the said date, no credit can be taken. This would be the correct method of understanding of the position of law. 17. The introduction of Rule 11(3) of the Cenvat Credit Rules, 2004, by Notification No. 10/2007-C.E. (N.T.), dated 1-3-2007 and the Tax Research Unit Circular in D.O.F. No. 334/1/2007-TRU, dated 28-2-2007 clarifying that it will come into effect immediately, makes it clear that the position of law as it stood decided in the assessee s own case by the Karnakata High Court, the appeal against which was dismissed by the Supreme Court, is the correct position. The Tribunal in this case erred in distinguishing the decision of the Bangalore Bench Tribunal placing reliance on Albert David Ltd. case, referred supra. In any event, Ashok Iron and Steel Fabricators case, referred supra, is a Larger Bench decision and the same has been upheld by the Supreme Court and that would be binding on the Tribunal, rather than the Two-Member Bench decision in Albert David Ltd. case, referred supra. In view of the above judgments, issue involved in the present case has been settled there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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