2002 (1) TMI 92

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.... and Krishna Kumar, Member (J)   [Order per : Justice K.K. Usha, President]. - This is an appeal at the instance of assessee from the order of Commissioner (Appeals) vide Order-in-Appeal No. 180 (KDT)CE/JPR-I (103)/2001, dated 3-4-2001 confirming a differential duty demand of Rs. 7,07,445/- against the appellant and imposing an equal amount of penalty under Section 11AC of the Central E....

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....duty. 3. It is not disputed that at the time of taking the Modvat credit the final products were dutiable. The appellant, therefore, contended that the subsequent exemption to the final product from duty would not result in violation of any of the provisions of Rules. The adjudicating authority passed an order disallowing the credit of Rs. 7,62,439/- and imposed penalty of same amount under Rul....

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....graph from the decision of the Supreme Court in Dai Ichi Karkaria Ltd. we have taken the view that if the credit was taken at a time when the final product was not exempted from duty and it was utilised, a subsequent exemption of the final product will not be a reason for reversal of the credit by the Excise authority : "It is clear from the Rules, as we read them, that a manufacturer obtains c....

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.... The credit is, therefore, indefeasible. It should also be noted that there is no correlation 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 tha....