9911796707
TMI Blog2008 (10) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... and is to be recovered if adequate credit is not in balance? 2. There is conflicting decisions rendered by the CESTAT, Bangalore Bench and Chennai Bench. The Bangalore Bench in the case of TAFE Ltd. (Tractor Division) v. CCE, Bangalore - 2007 (210) E.L.T. 571 (Tribunal) = 2007 (79) RLT 706 (T-Bangalore) held that the input credit legally taken, when the final product was dutiable need not to be reversed on final product becoming exempt from payment of duty w.e.f. 9-7-2004. On the other hand, the Chennai Bench in the case of Tractors & Farm Equipments Ltd. v. CCE 2007 (212) E.L.T. 223 (Tribunal) = 2007 (79) RLT 384 (T-Chennai) held that the credit taken on input in stock or in process or contained in the final product in stock on 9-7-2004, is liable to be reversed if unutilised an the conflicting been referred to the Larger Bench. 3. The relevant facts of the case, in brief, are that the Appellants are engaged in the manufacture of Tractors, Tractors Parts and Engines classifiable under Heading Nos. 87.01, 87.08 and 84.08 of the First Schedule to the Central Excise Tariff Act, 1985. The Appellants were availing Cenvat Credit on inputs and capital goods under Cenvat Credit Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo High Courts, viz. Super Cassettes Industries v. Union of India - 1997 (94) E.L.T. 302 of Allahabad High Court and Collector of Central Excise & Customs, Cochin v. Premier Tyres Ltd. - 2001 (130) E.L.T. 417 of Kerala High Court. The Larger Bench of the Tribunal followed the decision of Kerala High Court in the case of Premier Tyres Ltd. (supra), wherein it has been held that if at the time of taking the Modvat credit, final products are not exempted, it is not necessary to reverse the credit in the light of subsequent exemption notification relating to the final product. It has followed the decision of the Hon'ble Supreme Court in the case of Collector v. Dai Ichi Karkaria Ltd. - 1999 (112) E.L.T. 353 (S.C.). The Larger Bench dismissed the appeal filed by the Revenue against order of Commissioner (Appeals). In that case, the Commissioner (Appeals) took the view that there was no provisions under Rules 1944 to recover such credit on inputs, which has been lawfully taken and utilised at that material time in the clearance of dutiable final product. Revenue filed appeal against the order of the Larger Bench of the Tribunal in the case of Ashok Iron & Steel Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in the case of Dai Ichi Karkaria Ltd. (supra) held that there is no provisions in the Rules, 1944 for reversal of credit by the Revenue except it has been taken in irregular or illegal manner. He drew the attention of changes of Modvat/Cenvat Credit Rules time to time. He submits that by Notification No.10/2007-C.E. (N.T.), dated 1st March, 2007, Sub-Rule (3) was inserted in Rule 11 of Cenvat Credit Rules, 2004 for reversal of credit in such situation. He submits that the Notification indicates that the said notification shall come into force on the date of their publication in the Official Gazette. So, there is no provision to reverse the credit prior to Notification dated 1st March, 2007. It is also contended that the Appellants utilised credit lawfully, when the final product was dutiable. There is no violation of Rule 6(1) of Rules 2002 and recovery of credit under Rule 12 of Rules 2002 cannot be invoked. Ld. Advocate submits that on the similar issue demand was raised under Rule 12 of Rules 2002 for violation of Rule 6 of the said Rules, the Tribunal in the case of Commissioner of Central Excise, Chandigarh v. C.N.C. Commercial Ltd. - 2006 (206) E.L.T. 874 (T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veries." 16. We may observe that Rule 57-I of Rules 1944 equivalent to Rule 57AH and Rule 12 would apply where the Cenvat Credit has been taken or utilised wrongly. In the present case, there is no objection of the Revenue whatsoever credit taken by the Appellants and its utilisation at the clearance of the dutiable final products. So, the taking of credit and its utilisation were correct. The Hon'ble Supreme Court in the case of Dai Ichi Karkaria Ltd. (supra) decided that when the credit was legally taken and utilised, cannot demanded unless there is specific provision. It is settled that there is no one to one co-relation of utilisation of credit and use of inputs in the Modvat/Cenvat Scheme. So, it cannot be said that that the Appellants utilised the credit wrongly and the provisions of Rule 12 of Rules 2002 equivalent to Rule 57-I, Rule 57AH of Rules 1944 would not apply. The Board Circular dated 16-10-2001 as relied upon by the ld. Joint C.D.R. clarified that Rule 12 of Rules 2002 is the provision for recovery of credit taken incorrectly, in violation of Rule 6 of the said Rules. We have already stated that the Appellants had legally taken and utilised credit. So, Board circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the date of entitlement, there is no illegality or invalidity in taking credit of such Modvat/Cenvat credit, the right to utilise such credit against future liability towards duty become indefeasible and it is not liable to be reversed in the contingency discussed above." 20. On perusal of the Rule 6 of Rules and the corresponding Rules, as mentioned above, we are of the view that the Appellants had correctly taken the credit and utilised, when the final product was dutiable and there is no requirement to reverse the credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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