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2019 (2) TMI 931 - AT - Central ExciseCENVAT Credit - removal of inputs as such - input or not - Revenue has taken the view that the inputs procured for manufacture of Synthetic Detergent Powder, cannot be considered as inputs covered by the definition in Rule 2(k)(1) of the Cenvat Credit Rules - Held that:- The definition of “input” covers all goods, which are utilized in the manufacture of final product in the assessee’s factory. The assessee has procured various inputs, some of which were required for manufacture of Synthetic Detergent Powder. It so happened that the assessee did not actually commence the manufacture of this product while continuing with the manufacture of all other products in the factory. The inputs procured for the same, were cleared as such, since they could not be used in the manufacture. The Cenvat Credit Rules, 2004, provides for the circumstances, in which the inputs procured for manufacture, can be cleared as such. Rule 3 (4) subsequently provides for this scenario. It is specifically provided that when inputs are cleared as such, the manufacturer is required to reverse the amount equal to the cenvat credit taken on inputs. It is seen that the requirement of this Rule has been satisfied by the assessee - It is well settled position of law that once cenvat credit availed is reversed, it is to be considered as ab initio not availed - the assessee cannot be held to have availed cenvat credit irregularly in respect of inputs cleared as such. Demand of Interest - whether the assessee will be liable to pay interest on the cenvat credit availed on the inputs, which were never utilized in the manufacture? - Held that:- The assessee did not utilize the credit availed on the un-used inputs before reversal of the same. Under such circumstances, no interest liability will arise on the assessee. Penalty - Held that:- Since it is held that the credit availed cannot be held as irregular and no interest liability can be fastened on the assessee, there is no justification for imposition of penalty - penalty set aside. Appeal allowed - decided in favor of appellant.
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