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2022 (10) TMI 731 - AT - Central ExciseBenefit of exemption subject to the condition that no Cenvat Credit is availed - CENVAT Credit - availment of consolidated cenvat credit by a singly entry of all the inputs used in the manufacture of Finished goods which were cleared without payment of duty under the Notification No. 30/2004-CE dated 09.07.2004 during the period April 2016 to March 2017 - reversal of credit for exempt goods - Rule 6(3) of the Cenvat Credit Rules, 2004. Whether such reversal of credit, either by payment of 6% in terms of Rule 6 or by debiting the same from the Cenvat credit account, would result to satisfying the condition of notification No. 30/2004-CE in question? HELD THAT:- The condition of the notification is that no credit should have been availed in respect of inputs used in the manufacture of such goods. We find that the issue is no more res integra and stands settled by Hon’ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [1995 (12) TMI 72 - SUPREME COURT]. It stands held that when credit so availed is subsequently reversed, the situation would be as if no credit was ever availed. This issue had come up for consideration before the Allahabad High Court in the case of HELLO MINERALS WATER (P) LTD. VERSUS UNION OF INDIA [2004 (7) TMI 98 - ALLAHABAD HIGH COURT], wherein it is held that reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence, the benefit has to be given of the notification granting exemption/rate of duty on the final products since the reversal of credit on the input was done at the Tribunal’s stage. The appellant are eligible for exemption under Notification No. 30/2004-C.E. when they have reversed 6% of the value of exempted goods in terms of Rule 6(3)(i). It is found that the appellant’s claim on the applicability of sub-rule (3D) of Rule 6 is also legally sustainable. The said sub-rule provides for a deeming provision to the effect that payment of amount under sub-rule (3) should be considered as credit not taken for the purpose of such exemption notification. The impugned order is unsustainable, and accordingly set aside - appeal allowed - decided in favor of appellant.
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