2009 (8) TMI 521

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....10-6-03 with effect from 30-10-04. The proceedings were initiated to order recovery of Cenvat credit of Rs.3,18,763/- attributable to inputs , inputs contained in the semi-finished or finished goods on which credit was availed and utilised and which were lying in the factory as closing stock as on 30-10-04. The original authority confirmed the demand and imposed penalty. Commissioner (Appeals) upheld the order of the original authority. 4. Learned Advocate submits that the very same issue involving the same Notification No. 50/2003, dated 10-6-03 has been dealt with by the Tribunal vide Final Order Nos. 315-316/06-Ex. dated 5-5-2009 in Appeal No. E/863/06 and 306/07 and it was held that the credit taken to avail during the period was val....

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....the same applies only in respect of input credit legally taken and utilised on the dutiable final products. This interpretation is incorrect. The ratio of the decision is that when the credit has been taken legally and utilised legally, there is no scope for recovery of the same. Even in respect of inputs lying as such, when the credit has been taken legally and utilised, the question of recovery of credit alleging that the same was taken illegally and improperly or utilised illegally and improperly does not arise. Further, the very same issue has been decided by the Tribunal in the case of M/s. Purewal and Associates Ltd. wherein it has been held that demand taken need not be reversed when the party has opted for Notification No. 50/2003 f....

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....pra) held that if on the date of entitlement, there is no illegality or invalidity in taking credit of such Modvat/Cenvat credit, right to utilisation such credit against further liability towards duty become indefeasible and is not liable to be recovered in such contingency. The relevant portion of the said decision is reproduced below:- '39. Upshot of this discussion in that prohibition against claiming Modvat credit on exempted goods or subject to nil rate of duty applies in case where such exemption from payment of Duty or nil rate of Duty on end-product is predictably known at the time the recipient of inputs is entitled to take credit of duties paid on such inputs. The fact that due to subsequent notification or on contingency that....