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TMI Blog2024 (5) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted under Section 5A of Central Excise Act , the credit lying in balance shall lapse and shall not be allowed to be utilized for payment of duty on any other final product. Accordingly, the demand of accumulated Cenvat credit of Rs. 93,66,762/- was raised in the show cause notice which were confirmed by the OIO dated 12.06.2014. Being aggrieved by the said Order-in-original, the respondents filed an appeal before Commissioner (Appeals) who set aside the OIO and allowed the appeal filed by the Respondent. Therefore, the present appeal filed by the revenue. 2. Shri Girish Nair, Learned Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the grounds of appeal. He submits that the provision of Rule 11 (3) (ii) is very clear as according to which there is no option for the assessee who opt for the exemption notification with the accumulated credit lying in balance shall lapse and shall not be available for utilization. Therefore, the impugned order is not legal and correct and the same deserves to be set aside. He also submitted a synopsis dated 12.02.24 which is taken on record and considered. 3. Shri Anand Mishra. Learned Counsel along with Himanshi Patwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided in India or exported." 4.1 From the above Rule 11 (3) (ii) it can be seen that the provision of lapsing of credit is applicable only in the case where the assessee avails the absolute exemption notification. In the present case, the respondent has admittedly availed the exemption Notification No. 30/2004- CE which contains the following condition:- "Provided that anything contained in this notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provision of Cenvat Credit Rules, 2002." 4.2 As per the said condition, the Notification No. 30/2004-CE is not absolute notification but is it is a conditional one. Therefore, the provision of lapsing of the accumulated unutilized credit as provided under Rule 11 (3) (ii) of Cenvat Credit Rules, 2004 is not applicable in the facts of the present case. This issue has been considered time and again in various judgments. This Tribunal in the case of Welspun India Ltd vide Final Order No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prospective application. We also find that in respect of exemptions based on the value or quantity of clearances in a financial year sub rule (2) of Rule 11 had always provided for such reversal. The present case does not pertain to exemption based on value of clearances. Therefore, we find that the demand for reversal of the Cenvat credit is without any authority of law applicable during the relevant period. We have considered the order of the Tribunal Delhi in the case of Albert David (supra) upheld by the Supreme Court, which was issued in the context of erstwhile Modvat Credit Rules. We also note that the Jurisdictional High Court of Madras in the case of TAFE (India) (supra), has considered the case law of Albert David also in the context of the introduction of Rule 11(3) of CCR 2004 and held that this subrule had only prospective application and not retrospective application. 20. We also find that after the introduction of Rule 11(3) by Notification No. 10/2007 dt. 01.03.2007 the Tax Research Unit of CBEC has issued Circular No. 334/1/2007-TRU dt. 28.02.2007 clarifying that it will come into effect immediately. The letter does not suggest that Rule 11(3) was supposed to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CESTAT was justified in passing the impugned order without discussing the facts of the case alleged to be covered and its application to the case on hand? 5. This Court in the case of the Commissioner Central Excise v. TAFE Limited (Tractor Division) disposed off on 1st March 2011 [2011 (268) E.L.T. 49 (Kar.)] after referring to the various judgments held 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, they vest in the assessee and the assessee cannot be divested of that credit as the law does not provide for the same. Therefore, the authorities taking advantage of the notification exempting the final product cannot claim reversal of Cenvat credit either in respect of final product which have come into existence on the date of the notification or on the input ..... X X X X Extracts X X X X X X X X Extracts X X X X
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