2007 (4) TMI 104

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.... by 26-4-02. The appellant was clearing the finished goods at nil rate of duty till 28-2-03. Since 1-3-03, a duty of 8% ad valoram was imposed on the final products vide Notification No. 6/2003- CE, dated 1-3-03. Since imposition of duty, the appellant had opted for exemption under Notification No. 8/02-CE, dated 1-3-02 and after crossing the clearance value of Rs. 100 lakhs, they had started paying duty on final product with Cenvat facility. They availed Cenvat credit on the aforesaid capital goods in the month of March and April, 2003, which were installed and utilised in the month of March, 2002 and April, 2002. A show cause notice dated 21-1-04 was issued to disallow the Cenvat credit on the said capital goods used in the manufacture of....

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....ondent reiterates the finding of the Commissioner (Appeals). He submits that in this case the appellant received and installed the capital goods during the period from March, 2002 to April, 2002 when the final product attracted nil rate of duty. Therefore, it was used exclusively in the manufacture of exempted final products. Hence, both the authorities below rightly disallowed the credit. 4. After hearing both the sides and on perusal of record, it is seen that Rule 6(4) of Cenvat Credit Rules, 2002 provides that no credit shall be allowed on capital goods which are exclusively used in the manufacture of exempted goods, other than the final products which are exempt from the whole of duty of excise leviable thereon under any notificatio....

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....earned Advocate that initially goods were used for manufacture of exempted goods and subsequently the same were used in manufacture of dutiable goods and the restriction imposed under Rule 6(4) of the said Rules is not applicable have no force. At any event, the appellant was not entitled to take credit when the capital goods were received by them. Thus, the lower authorities rightly disallowed the credit. 6. The case-laws relied upon by the learned Advocate are not applicable in this case for the reason as under :- (i) CCE, Coimbatore v. Balaji Mills Ltd. (supra), the Tribunal held that Modvat credit cannot be denied to the assessee when the capital goods are used both for manufacture of dutiable and exempted goods. However, the cred....