2009 (12) TMI 1020 - AT - Central Excise

Tribunal rules in favor of manufacturer on SSI exemption for M.S. Pipes fittings

The Tribunal ruled in favor of the respondent, engaged in manufacturing M.S. Pipes fittings, regarding the applicability of SSI exemption under ... - Respondents, manufacturers of M.S. pipe fittings, had nil CENVAT credit on 1.4.2005 but held finished goods and inputs in stock when they opted for SSI exemption under Notification No. 8/2003. Revenue issued show-cause alleging reversal of CENVAT attributable to inputs in stock under Rule 9(2) of the Cenvat Credit Rules; demand was confirmed but set aside on appeal. Tribunal and the Punjab & Haryana High Court have held that SSI exemption granted by notification is not equivalent to exemption under Rule 9(2) and cannot be read so as to undermine the 'indefeasibility of Modvat Credit.' Rule 9(2) only requires determination of CENVAT taken on inputs in stock and debiting it from the assessee's credit 'if any,' with further credit balance, 'if any,' lapsing, and does not constitute a recall of Modvat credit already utilized. There is 'No one to one relationship of inputs used and the final products manufactured and cleared from the factory,' hence the 'assessee [is] not required to reverse the CENVAT credit.' Appeal dismissed.