TaxTMI 
TaxTMI 
2011 (10) TMI 38
X X X X Extracts X X X X
X X X X Extracts X X X X
.... final product manufactured by them. The assessee opted to avail nil rate of duty with effect from 8th April, 2004 under the said Notification No. 50/2003. At that stage, the assessee had already availed CENVAT credit under the Rules, amounting to Rs. 4,78,260/- on inputs/work in progress/finished goods. The Superintendent, Central Excise, Range Haridwar, directed the assessee that since they are opting to avail exemption on the final product under the Central Excise Notification No. 50/2003, they cannot be given CENVAT credit on the raw materials/inputs and that the said CENVAT credit taken by them has to be reversed. Accordingly, on the direction of the Superintendent, the CENVAT credit was reversed by the Department. On 4th July, 2005, the assessee filed an application for the refund of the duty contending that CENVAT credit was validly availed by them and the same could not be reversed by the Department. Instead of refunding the amount, the Department directed the assessee to show cause as to why the refund claimed by them should not be disallowed. The Adjudicating Authority, namely, the Deputy commissioner, Central Excise, by an order dated 6th July, 2005, allo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Cenvat credit validly taken and utilized could not be reversed. The Tribunal further held that the assessee having correctly taken the credit when the final product was dutiable, there was no requirement to reverse the credit on the final product becoming exempted and that such credit could not be recovered under Rule-12 of the Rules. The Department, being aggrieved by the aforesaid decision of the Tribunal, has filed the present appeal under Section 35G(1) of the Central Excise Act, which was admitted on the following question of law, namely: "(a) Whether the CENVAT Credit availed on inputs utilized in the manufacture of exempted goods (exempted under Notification No. 50/2003-CE dated 10.06.2003) is admissible to the party notwithstanding the provisions of Rule 6 of Cenvat Credit Rules, 2002 which clearly lays down that the Cenvat Credit shall not be allowed on such quantity of inputs, which is used in the manufacture of exempted goods?" Heard Sri Shobhit Saharia, the learned counsel with Sri Hari Mohan Bhatia, the learned counsel for the appellant-Department and Sri P.R. Mullick, the learned counsel for the respondent-assessee. We have considered the submissio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export." In the light of the aforesaid provision, the learned counsel for the appellant contended that Rule 6(1) of the CENVAT Credit Rules, 2002 clearly states that CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods. Since the assessee opted to avail exemption under the Central Excise Notification No. 50/2003, the CENVAT credit availed by the assessee was rightly reversed at the time when the assessee opted for exemption from payment of Central Excise duty under the Notification No. 50/2003. The learned counsel contended that the spirit of law was crystal clear to the extent that when the goods got exempted, then the credit on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e inputs have been used for manufacture of the same product which has become exempted from payment of excise duty by means of a subsequent notification. The reason is clear that there is no provision for reversal of a CENVAT credit. This view of ours is fortified by a decision of the Supreme Court in Dai Ichi Karkaria's case (supra), wherein the Supreme Court, after considering the scheme of the CENVAT Credit Rules, held: "It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilized, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in....