Cenvat credit already validly availed survives later exemption of the final product, with refund challenge rejected.

Cenvat credit validly availed on inputs for manufacture of a dutiable product was not required to be reversed merely because the final product later became exempt under a subsequent notification. The Tribunal followed its earlier view and supporting High Court decisions that once credit has lawfully accrued, it is not divested by a later exemption of the finished goods. On that basis, credit taken before the exemption date was upheld, and the Department's challenge to the consequential refund failed.

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Issues: Whether Cenvat credit validly availed before the assessee opted for exemption was liable to be reversed when the final product became exempt under a subsequent notification, and whether the Department could sustain its appeals against refund granted on the same footing.

Analysis: The credit had been lawfully taken when the inputs were received for manufacture of a dutiable final product. The later exemption of the same product did not create any rule requiring reversal of credit already validly accrued. The Tribunal followed its earlier view and the supporting High Court decisions that Cenvat credit, once validly availed, is not divested merely because the finished goods later become exempt. On that basis, the assessee remained entitled to the credit taken prior to the relevant exemption date, and the Department's challenge to the consequential refund failed.

Conclusion: The credit already validly taken before the exemption could not be reversed, and the assessee succeeded while the Department's appeals were rejected.

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