TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 80
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....l the same were fully and unconditionally exempted from whole of the duty by Notification No. 23/2004-C.E., dated 9-7-2004. As on 8-7-2004, the appellant had some inputs in stock and also the inputs in process and contained in the finished products in stock. The finished products in stock as on 8-7-2004 and the finished products manufactured out of the inputs in process were cleared at nil rate of duty after 8-7-2004. Thus, w.e.f 9-7-2004, finished products manufactured by the appellant became "exempted goods" within the meaning of this term as defined in Rule 2(d) of the Cenvat Credit Rules, 2002 and Cenvat credit, if any, availed on the inputs used in or in relation to manufacture of the final products was no longer admissible in terms of....
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....p;Heard both the sides. 3. Shri O.P. Agarwal, Chartered Accountant, ld. Counsel for the appellant, pleaded that the issue involved in this case stands decided by the Larger Bench of the Tribunal in the case of HMT Ltd. v. CCE reported in 2008 (232) E.L.T. 217 (Tribunal-LB), wherein the Tribunal held that when in respect of the certain final products, input duty credit was availed and those final products become fully exempt from duty, the Cenvat credit involved on the inputs lying in stock or in process or contained in the final products lying in stock on the date of exemption, is not required to be reversed. He, therefore, pleaded that the impugned order is not sustainable. 4. Shri Sumit Kumar, ld. Departmental Representative d....
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....g contained in sub-rule (1), the manufacturer or producer of final products shall be allowed to take Cenvat credit of duty on the inputs lying in stock or in process or inputs contained in the final product lying in stock on the date on which the goods cease to be exempted goods, or become excisable goods. Rule 6(1) provided that "Cenvat credit shall not be allowed on such quantity of inputs which is used in the manufacture of the exempted goods except in the circumstances mentioned in sub-rule (2). Sub-rule (2) of Rule 6 covers a situation where a common cenvated inputs are used for manufacture of dutiable and exempted final products and this rule gives two options to the manufacturer - either to maintain separate stock and inventory in re....
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....cture of the CENVAT scheme. Sub-rule (1), therefore, merely highlights that principle. Sub-rule (1) covers all inputs, including fuel, whereas sub-rule (2) refers to non-fuel-inputs. Sub-rule (2) covers a situation where common cenvated inputs are used in or in relation to manufacture of dutiable final product and exempted final product but the fuel-input is excluded from that sub-rule. However, exclusion of fuel-input vis-à-vis non-fuel-input would still fall in sub-rule (1). As stated above, sub-rule (1) is plenary, hence, it cannot be said that because sub-rule (2) is inapplicable to fuel-input(s), CENVAT credit is automatically available to such inputs even if they are used in the manufacture of exempted goods. The cumulative rea....
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....lies upon the Apex Court's judgment in case of Collector v. Dai Ichi Karkaria reported in 1999 (112) E.L.T. 353 (S.C.). However, the perusal of this judgment of the Apex Court would show that the only issue decided in the case is the valuation of the intermediate products, manufactured in a factory and which are captively consumed in the manufacture of final products - whether the cost of the intermediate product on which its assessable value is based, should include the element of excise duties/Additional Customs Duty suffered by the inputs and whose modvat credit has been availed. The duty on an intermediate product consumed captively is required to be paid when either the final product is fully exempt from duty or there is no duty exempt....
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....xemption status, was nowhere discussed, as this was not the question before the Hon'ble Court. In our view, this question has been addressed by the Apex Court only in its judgment in the case of Gujarat Narmada Fertilizers Corporation (supra) and it is this judgment which is applicable to this case. The Larger Bench judgment in case of HMT v. CCE (supra) is per incuriam. 8. If the appellant's plea is accepted and the judgment of the Larger Bench in case of HMT v. CCE (supra) is accepted as correct, it would enable an assessee expecting his product to become fully exempted, as happens in case of assessee availing full duty exemption under a notification based on value or quantity of clearances in a financial year or area based Exemptio....