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2016 (10) TMI 1027 - AT - Central ExciseSSI exemption - Cenvat credit of duty availed on inputs and input services received by the appellant on or after 01/04/2008 - Held that: - such credits are availed in violation of Rule 6 (1) of CCR, 2004. The provisions of said rule clearly states that the Cenvat credit shall not be allowed on such quantity of input used in or in relation to manufacture of exempted goods. As such, the manufacturer is not eligible to avail any credit when they are manufacturing only exempted goods. Reversal of credit availed on inputs, inputs contained in WIP and finished goods as on 01/04/08 as well as lapsing of balance of credit lying on the books of accounts of the appellants as on 01/04/200 - Held that: - The Honble High Court of Himachal Pradesh in Ranbaxy Laboratories Ltd. vs. CCE, Chandigarh reported in [2012 (4) TMI 369 - HIMACHAL PRADESH HIGH COURT] examined similar set of facts and held that though the final product may be exempt from payment of excise, the assessee cannot be asked to reverse the Modvat credit already taken by it - there is no justification to demand reversal of Cenvat credit already availed and also lying in books of accounts of the appellant. No fresh credit can be taken from 01/04/2008 on any inputs as the appellants were manufacturing only exempted goods from that date and they are not covered by the credit scheme during that period. Regarding imposition of penalty u/r 15 (1) of CCR, 2004, except for credits availed after 01/4/2008, the appellant is not liable to reverse/lapse the other credits duly taken, it is right and proper to reduce the penalty to ₹ 1 lakh on the appellant. Appeal disposed off - decided partly in favor of assessee.
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