Cenvat credit reversal on exempt products: Rule 6(1) held inapplicable where exemption had not yet taken effect.

Rule 6(1) of the Cenvat Credit Rules, 2002/2004 was considered in relation to reversal of input credit where the assessee's final product became exempt from excise duty from 1-8-2004. The analysis stated that the assessee had already obtained reversal of Cenvat credit on that date, when the final product was not yet exempt, and treated the matter as covered by Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd. On that footing, Rule 6(1) was held inapplicable on the facts, and the assessee succeeded.

---

---

Issues: Whether Rule 6(1) of the Cenvat Credit Rules, 2002/2004 applied to require reversal of Cenvat credit in respect of inputs when the assessee's final products became exempt from excise duty from 1-8-2004.

Analysis: The assessee had already been granted reversal of Cenvat credit on 1-8-2004, and on that date the final product was not yet exempted. The cases were held to be covered by the earlier decision in Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd., which governed the treatment of such credit. On that footing, Rule 6(1) could not be invoked against the assessee in the facts of the case.

Conclusion: Rule 6(1) of the Cenvat Credit Rules, 2002/2004 was held inapplicable, and the assessee succeeded.

---