Modvat credit upheld on OTS cans used in manufacturing final products, even if final product later became exempt.

The Commissioner (Appeals) upheld the grant of Modvat credit on OTS cans used in manufacturing final products, rejecting the Revenue's appeal. The Commissioner ruled that credit cannot be denied if inputs were utilized when final products were dutiable, even if the final product later became exempt. The Tribunal's decision in a similar case was affirmed by the Apex Court, emphasizing that once credit is validly taken, its benefit remains without time limitation. The appeal was dismissed, affirming the Commissioner's decision in favor of the assessee.

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Issues:
Grant of Modvat credit on OTS cans used in the manufacture of final products.

Analysis:
The Revenue appealed against the order of the Commissioner (Appeals) upholding the grant of Modvat credit on OTS cans used in manufacturing final products. The Revenue contended that the final product was exempted at the time of utilization of inputs. However, the Commissioner (Appeals) noted that the final product was not exempted when the inputs were received and utilized. Citing relevant rules, the Commissioner held that credit cannot be denied in such cases. The Commissioner relied on a Tribunal judgment in the case of CCE, Rajkot v. Ashok Iron & Steel Fabricators, which established that credit need not be reversed if availed and utilized during a period when final products are dutiable, even if the final product is subsequently exempted. The Tribunal's decision was upheld by the Apex Court, confirming that once credit is validly taken, its benefit is available to the manufacturer without any time limitation. Therefore, the Commissioner (Appeals) ruled in favor of the assessee, leading to the Revenue's grievance against this order.

The learned SDR relied on a different judgment in the case of Albert David Ltd. v. CCE, Meerut, where the final product had gotten exempted before the utilization of inputs, making the benefit of credit ineligible. However, in the present case, the final goods were not exempted when the inputs were utilized, making the ruling of Albert David Ltd. distinguishable. The SDR argued that the Commissioner (Appeals) correctly applied the Tribunal's ruling in the case of Ashok Iron & Steel Fabricators, which was approved by the Apex Court. Consequently, the appeal lacked merit, and it was rejected. The judgment was pronounced and dictated in open court.

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