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TMI Blog2024 (11) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... taken on the inputs used in the manufacture of the finished products. As duty liability had been discharged on the intermediate product, the entitlement to avail credit thereof could not be denied and, to the extent that such credit was utilized for clearance of the intermediate product, there is no provision in law which enables recovery of duty thereof. The denial of exemption notification, and consequent recovery of duty, is premised on credit having been taken even though the goods involved were allegedly used in the manufacture of finished products that were exempted. It is the claim of the appellant that these were actually used in the manufacture of intermediate product that was duty paid and hence eligible to be availed as credit. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1A of Central Excise Act, 1944, along with applicable interest under section 11AA of Central Excise Act, 1944, and imposing penalty of like amount under rule 25 of Central Excise Rules, 2002 besides imposing penalty of ₹ 2,00,00,000 on Shri Manish Rupani under Rule 26 of Central Excise Rules, 2002, is the chargeability to duty, by denial of benefit of notification no. 30/2004-CE dated 9th July 2004 on the ground that the condition of non-availment of CENVAT credit therein had been breached in procurement of granules , ANTISTAT 008 and EUTEX OB during the disputed period. 2. The case of the appellant is that the credit of ₹ 3,10,020/- had been reversed and the disproportionate consequences are contrary to the decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them and that they had not taken credit of ₹ 78,52,287 on chemicals and ₹ 7,40,649 used directly in manufacture of finished products. It was further submitted that the total credit incolved in the three items in dispute was ₹ 3,10,020 which had, since, been reversed. 5. We have heard Learned Authorised Representative. 6. It is not in dispute that the appellant had cleared all final product by availing exemption in the impugned notification and that such exemption is not available in the event that CENVAT credit had been taken on the inputs used in the manufacture of the finished products. As duty liability had been discharged on the intermediate product, the entitlement to avail credit thereof could not be denied and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturer could avail of the Modvat credit as well as full duty exemption under applicable small scale exemption notification with regard to some specified goods. Reference is answered accordingly. 7. As a result the impugned order-in-appeal dated 28-1-1999 passed by the Central Excise is set aside and the appeal of Franco Italian Company (supra) is allowed subject to the conditions that Modvat credit taken of the duty paid on the inputs which were utilised in the manufacture of duty free goods, is reversed. 18. In view of the above decision we are of the opinion that reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence the benefit has to be given of the notification granting exemption/rate of duty on the final pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completely misunderstood the decision in the case of Chandrapur Magnet Wires Ltd. (supra) in which the Supreme Court has quoted the Circular issued by the Ministry of Finance, being Circular No. 22/8/86, dated 10-4-1986. In Para 5 of the said Circular it was mentioned that the duty paid in the inputs used should be debited, before removal of such exempted final products. Since the Circular in that case required reversal of the credit before removal of the final product, hence the Supreme Court interpreting the said circular has mentioned that they see no reason why the assessee cannot make debit entry before removal of exempted final products. 21. In the present case for the purposes of claiming the benefit of the Notification No. 15/94-C.E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandrapur Magnet Wires Co. (supra). 26. Thus all the Division Benches of the Tribunal have been following the larger Bench decision and have taken a consistent view that reversal of the credit can be made even subsequent to the clearance of the final products. The impugned order dated 1-10-2003 appears to be the only order which is contrary to the consistent view taken so far. 27. In another case of M/s. High Line Pen v. CCE Final Order No. 359/2003-NBA, dated 24-7-2003 [2003 (158) ELT 168 (Tri.)] the appellate Tribunal again took a view that reversal of credit should be done for availing the benefits of the notification and the time of reversal was not material. 28. The Tribunal in the case of Kitply Industries Limited Eastern Bench at Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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