Cenvat credit on inputs need not be reversed merely because final products later became exempt.

Cenvat credit validly taken on inputs when final products were dutiable did not have to be reversed merely because the final products later became exempt under Notification No. 30/2004-CE. The dispute concerned credit on inputs in stock, work-in-progress and finished goods, and the matter was treated as covered by an earlier identical Tribunal decision, making the Revenue's contrary authorities inapplicable. On those facts, reversal of credit was not warranted and the refund claim was sustainable.

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Issues: Whether Cenvat credit taken on inputs lying in stock, work-in-progress and finished goods was required to be reversed when the final products became exempt under Notification No. 30/2004-CE dated 09.07.2004.

Analysis: The inputs had been validly credited when the final products were dutiable. After the exemption notification, the dispute related only to whether credit had to be reversed in respect of inputs as such and the inputs contained in work-in-progress and finished goods. The matter was treated as covered by an earlier Tribunal decision on identical facts, and the contrary authorities relied upon by the Revenue were found not directly applicable.

Conclusion: The reversal of Cenvat credit was not warranted on the facts of the case, and the assessee's refund claim was sustainable.

Ratio Decidendi: Where credit was lawfully taken while the final product was dutiable, exemption of the final product does not, by itself, require reversal of such credit if the issue is already covered by an identical binding Tribunal decision.

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