TaxTMI 
TaxTMI 
2008 (1) TMI 126
X X X X Extracts X X X X
X X X X Extracts X X X X
....t Credit Rules, 2002 read with Section 11A of the Central Excise Act, 1944, He also imposed penalty of Rs. 2,07,75,376/- under Rule 13 of Cenvat Credit Rules, 2002 for the intentional violation of the provisions of Rule 6(1) of Cenvat Rules, 2002. He also ordered for recovery of interest on the above confirmed demand amount under the provisions of Section 11AB of the Central Excise Act, 1944. He also confiscated the goods (inputs) lying in stock as on 9-7-2004 (i) as such (ii) contained in work is progress and (iii) contained in finished goods under Rules 13 of Cenvat credit Rules, 2002. 3. Excise Appeal No. 1632 of 2006 has been filed by M/s. Escorts Limited against the Order-in-Original No. 35/KKJ/Adjn./2005-06 dated 31-1-2006 passed b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng under the Chapter Heading No. 87.01 of the First Schedule to the Central Excise Tariff Act, 1985. 7. The issue involved in all the three appeals is common i.e. whether the Cenvat credit involved on the inputs lying in stock as such or contained in the work in process or used in the manufacture of tractors lying in stock was required to be reversed by the appellants after the tractors were exempt from payment of duty vide Notification No. 23/2004-C.E. with effect from 9-7-2004. 8. During the course of the hearing, our attention was drawn to the conflicting decisions rendered by the CESTAT, Bangalore and the CESTAT, Chennai on the subject-matter. While the CESTAT, Bangalore in the case of TAFE Limited (Tractor Division) v. CCE, Banga....
X X X X Extracts X X X X
X X X X Extracts X X X X
....003 (158) E.L.T. A273 (S.C.). 10. While the five member Bench of the Tribunal in the case of Ashok Iron and Steel Fabricators has held that the credit availed and utilized during the period when final products were dutiable is not to be reversed when subsequently the final products are exempted from duty, the two member Bench of the Tribunal in the case of Albert David Ltd., observed that the inputs were utilized in the manufacture of the final product which were chargeable to duty but were subsequently exempted from duty. The demand was raised only in respect of the inputs lying unutilized. Credit taken on such inputs utilized in the manufacture of the wholly exempted goods is recoverable. 11. We also note that the CESTAT, Chennai it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product; that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available". 12. Both the Tribunal's have also referred to Rule 57AD of the erstwhile Central Excise Rules, 1944 which provides that the "Cenvat credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods". Before Rule 57AD, Rule 57C of the erstwhile Central Excise Rules, 1944 was having similar prohibition and after Rule 57AD, Rule 6(1) of the Cenvat Credit Rules, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upreme Court has stated that when the credit is validly taken, its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is therefore indefeasible. Moreover, Rule 57AD does not say that the credit validly taken should be reversed when the final product is exempted. The proper interpretation of Rule 57AD is that when the final product is exempted, no credit can be taken at all. But, t the present case is distinguishable. The credit has already been taken validly when tire final product was dutiable. Such a situation is not covered by the Rule 57AD. We are bound by the dictum of the Apex Court in the Dai Ichi ....