TMI Blog2010 (1) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... er: Mehinder Singh Suller, J]. - The facts barely needed, culminating in the commencement of, relevant for disposal of present appeal and emanating from the record, are that as per the Central Excise Policy, the plastic storage tanks upto the capacity of 300 litres are exempted from payment of excise duty, subject to the condition that no credit of the duty was paid on the inputs used in the manufacture of such goods. The respondent-M/s Diplast Plastics Limited, Mohali-assessee (hereinafter to be referred as "the assessee") was engaged in the manufacture of PVC Pipes and Plastic storage tanks. The assessee had been maintaining a separate account of raw material i.e. plastic granules to be used in finished products i.e. two categories of wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department?" 4. That is how, we are seized of the matter. 5. As indicated earlier, the Commissioner (Appeals) as well as the Appellate Tribunal accepted the claim of the assessee and dismissed the appeals of the revenue, vide impugned orders (Annexures A2 and A3). 6. Learned counsel for the revenue has contended that the assessee did not initially fulfill the condition and had not reversed the entire modvat credit of raw material in the finished exempted goods and as had reversed the credit only after being detected by the Department, therefore, the assessee was not eligible to avail the benefit of exemption. 7. On the other hand, learned counsel for the assessee has argued that admittedly, the assessee has already reversed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is not entitled to the exemption, is not only devoid of merit, but misplaced as well, because the mere fact of reversal of credit is sufficient compliance to claim the indicated benefit, in respect of inputs used in the exempted goods as admittedly, the assessee is manufacturing exempted as well as dutiable goods using the same material. 11. An identical question was decided by the Hon'ble Supreme Court in Chandrapur Magnet Wires (P) Ltd.'s case (supra). Having interpreted the relevant provisions of Rule 57 of the Central Excise Act, 1994, it was observed by the Apex Court as under:- "It is true that the assessee has not maintained separate accounts of segregated the inputs utilised for manufacture of dutiable goods and duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he final products which are exempt from duty. In such a case, the manufacturer may take credit of duty paid on all the inputs used in the manufacture of final products on which duty will have to be paid. This can be done only if the credit of duty paid on the inputs used in the exempted products is debited in the credit account before the removal of the exempted final products. In view of the aforesaid clarification by the Department, we see no reason why the assessee cannot make a debit entry in the credit account before removal of the exempted final product. If this debit entry is permissible to be made, credit entry for the duties paid on the inputs utilised in manufacture of the final exempted product will stand deleted in the account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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