Cenvat credit reversal not required when final products become exempted later, as settled by prior binding precedent.

Credit validly taken was not required to be reversed merely because the final products became exempted subsequently under Rule 6(1) of the Cenvat Credit Rules, 2002. The Madras HC treated the issue as concluded by an earlier Division Bench ruling, which had also not been disturbed by the Supreme Court, and therefore rejected the Revenue's contention that later exemption triggered reversal of credit already validly availed. The question of law was answered in favour of the assessee.

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Issues: Whether credit validly taken is required to be reversed when the final products become exempted subsequently under Rule 6(1) of the Cenvat Credit Rules, 2002.

Analysis: The appeal raised a covered question of law. The governing principle applied was that the issue stood concluded by an earlier Division Bench decision, and the same view had also been carried to the Supreme Court without any interference. On that basis, the Court treated the controversy as settled against the Revenue's contention that subsequent exemption of the final product necessitated reversal of credit already validly taken.

Conclusion: Credit validly taken was not required to be reversed merely because the final products became exempted subsequently, and the question of law was answered in favour of the assessee and against the Revenue.

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