TaxTMI 
TaxTMI 
1995 (5) TMI 156
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....spondents took credit of the duty on the inputs and cleared the finished products. After the final product came to be exempted from the excise duty or chargeable to nil rate of duty, the credit already taken on the inputs which were lying in the stock on the date of availing of the exemption of duty on the finished goods should be directed to be reversed. 3. Shri Chakravarthy, the learned Consultant, adopted the reasonings of the authorities cited in the impugned order, namely, the ruling of the South Regional Bench in the case of CCE, Bangalore v. M/s. Wipro Information Techno- logy reported in 1988 (33) E.L.T. 172. 4. On going through the entire records and after hearing the pleas of the parties, we find that the responden....
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....e only course available to the authorities was recovery of duty payable on the inputs which were still in stock in terms of Rule 57F. 6. We have considered the pleas made by both the sides. The issue as of now is covered by the ruling of this Bench in the case of CCE v. Becon Weir referred to supra wherein we have held as under : We observe that in a number of similar cases we have held that once it can be shown that Modvat credit was correctly taken at the time when the appellants were working under the Modvat scheme and the same was also correctly utilised for paying duty towards the notified finished products in respect of which necessary declaration had been filed, the question of recovery of the utilised Modvat credit does n....
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....he Modvat credit taken. The fact that the aerated water was denotified under Rule 57A for the purpose of Modvat credit under Notification 203/87 does not in any way change the status of the inputs which are lying in stock. These by fiction created under the rule have to be treated as the manufacture of the respondent's factory and therefore when these are cleared for home consumption, from the factory, the same have to be charged to duty as if the same are the manufacture of the said respon- dents' manufacturing unit. Under Rule 49 consumption of the goods in the factory has to be deemed to be as if these goods have been issued out or removed from the factory place or premises for home consumption. In our view, provisions of Rule 57F(2) of ....
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....en cleared without payment of duty would not be available. The Larger Bench in para 17.2 of its order (reproduced above) in the case of Kirloskar Oil Engines Ltd. has observed that they are not pronouncing finally on the issue as to the eligibility to MODVAT Credit in respect of inputs which were lying in stock when the exemption notification was issued after the receipt of the goods in the factory and where MODVAT Credit had been utilised. They have, however, while touching upon the issue before us and to which reference was made before the Larger Bench also observed as under in para 17.2 of their order : We may only say at this stage that the provisions of Rule 56A provided [see sub-rule (3)(vii) of Rule 56A] for demand of duty on unut....
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....hange the status of the inputs which are lying in stock. These by fiction created under the rule have to be treated as the manufacture of the Respondent's factory and therefore when these are cleared for home consumption, from the factory, the same have to be charged to duty as if the same are the manufacture of the said Respondents' manufacturing unit. Under Rule 49 consumption of the goods in the factory has to be deemed to be as if these goods have been issued out or removed from the factory place or premises for home consumption. In our view, provisions of Rule 57(2) of the Central Excise Rules, 1944 will continue to operate in respect of the inputs on which MODVAT Credit has been taken. The only course open to the Revenue is to demand ....