TaxTMI 
TaxTMI 
2016 (10) TMI 1027
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....1/04/08. Further, the credit of duty taken on inputs lying in stock, inputs contained in WIP (Work in Progress) and inputs contained in finished goods as on 01/04/08 has not been reversed by the appellant. It was also noticed that credit on inputs and input services availed for the period prior to 01/04/08, but lying in balance as on 01/04/08, is also to lapse in the accounts of the appellant. On these three issues proceedings were initiated against the appellant by issue of show cause notice dated 28/04/09. The adjudication was completed by the impugned order. The Commissioner held against the appellant on all the three issues, as above and imposed a penalty of Rs. 5 lakhs on them in terms of Rule 15 (1) of Cenvat Credit Rules, 2004. The present appeal is directed against the said impugned order. 2. Shri A.K. Sharma, appearing on behalf of the appellant submitted that they have availed exemption under Notification No. 4/2006-CE for the first clearance of 3500 MT in a financial year. The whole demand relating to reversal of Cenvat credit as well as lapsing of such credit as on 01/04/08 which is subject matter of the present adjudication, is hit by time bar. 3. Further, on merit, ....
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....h in Ranbaxy Laboratories Ltd. vs. CCE, Chandigarh reported in 2012 (279) E.L.T. 194 (H.P.) examined similar set of facts and reversed the decision of the Tribunal. The findings of the Honble High Court is as below :- "13. It would be worthwhile noticing that while relying upon the decision of Apex Court in Dai-Ichi Karkaria Ltd. (supra), this Court in United Vanaspati Ltd., (supra), has held :- The short question which arises for decision is whether a manufacturer who has obtained credit of the Central Value Added Tax paid by him in respect of the raw material and inputs lying in stock or in process or contained in the final product lying in stock is required to refund/repay the credit when the final product is exempted from excise. The main argument of Shri Sandeep Sharma, learned Assistant Solicitor General of India is that the authorities below have not taken into consideration Rule 9(2) of the Cenvat Rules. A show cause notice was issued to the assessee on 31-1-1997 asking it to reverse the Modvat credit of Rs. 93,584/- on the inputs in hand and in process as well as on the inputs contained in the final product as on 23-7-1996. The undisputed facts of the case are that....
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....s exercised, he shall be required to pay an amount equivalent to the credit, if any, allowed to him in respect of inputs lying in stock or used in any finished excisable goods lying in stock on the date when such option is exercised and after deducting the said amount from the said amount from the balance, if any, lying in his credit, the balance, if any, still remains shall lapse and shall not be allowed to be utilized for payment of duty on excisable goods, whether cleared for home consumption or for export. After considering the Rule 57, the Apex Court held as follows :- 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....
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....remise. In such circumstances, no excise duty becomes payable on end product. Yet Modvat credit availed on inputs used in destroyed goods is not to be recalled. This is also suggestive of the fact the relevant date for considering exemption from duty of the end product in or in relation to which inputs are used is the date of its receipt in factory and condition is its actual use in or in relation to manufacture of end product by the manufacturer. The chargeability to duty or non-chargeability due to exemption or notified nil rate is to be considered at the stage before goods are actually produced, but on receipt of inputs intended to be used in manufacture of such goods. That being so ultimate clearance of goods at nil rate due to contingency existing at the time of removal does not affect the entitlement that legally arises long before that date. 14. We are in respectful agreement with the judgment of the Kerala [2001 (130) E.L.T. 417 (Ker.)] and Rajasthan High Courts. Since the language of Rule 9(2) of the Cenvat Rules is identical to that of Rule 57H(5) of the Excise Rules, we feel that the interpretation given by the Apex Court has to apply in the present case also and, ther....