2006 (2) TMI 576

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....vailing itself of the annual value of clearance based exemption from duty for such units. As a result, first clearances of the respondent in the early part of any financial year remains exempt. And no Modvat credit on inputs is available for such exempt clearances. Subsequently, upon changeover to payment of duty, Modvat credit is taken in respect of inputs. This cycle repeats annually. 3. Rule 9(2) of Cenvat Rules relates to changeover from duty paid clearances to exempt clearances. That Rule may be extracted : "9(2). A manufacturer who opts for exemption from whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been ....

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.... 5. The contention of the learned DR is that in the present case, since the assessee had opted for exemption, he was to pay in terms of that exemption. The   learned DR points out that rule specifically provides that "assessee shall be required to pay an amount equivalent to Cenvat credit". It is the learned DR's contention that since the rule specifically requires payment of an amount equal to the Cenvat credit, the assessee cannot opt for benefit of the exemption without fulfilling that requirement. Learned DR would also contend that it is well settled that any terms of a statutory provision cannot be read as redundant or superfluous [Grasim Industries Ltd. - 2002 (141) E.L.T. 593] and the Commissioner has deviated from thi....

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.... as credit was taken only on inputs when the appellant was discharging duty on the final product. According to learned Counsel, there could also be no contention of wrong utilization of credit inasmuch as the same was used only for discharging duty liability on final products. Learned counsel would contend that in a case where taking and utilization of credit are according to the provisions of Cenvat Credit Rules, no recovery can be effected under Rule 12. 7. Learned counsel also strongly relies on the judgment of the Apex Court in Dai Ichi Karkaria case and contends that Court has ruled in that case after considering all the provisions under Modvat Rules that the credit is "indefeasible" and once the credit was correctly utillised it ca....