TMI Blog2011 (10) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-2011 - Tarun Agarwala, U.C. Dhyani, JJ. Tarun Agarwala, ACJ. These three appeals involve the same question of law and are being decided together. For facility, the facts of M/s Apco Pharma Ltd. is being taken into consideration. The facts leading to the filing of the present appeal is, that the assessee M/s Apco Pharma Ltd. is a manufacturer of medicines and the final product manufactured by them was exigible to excise duty. The assessee was availing CENVAT credit on inputs purchased by them under the CENVAT Credit Rules, 2002 (hereinafter referred to as the Rules ). The Central Excise Department issued a Central Excise Notification No. 50/2003 dated 10th June, 2003, pursuant to which, the assessee undertook an expansion programme and became eligible for exemption of excise duty on the final product manufactured by them. The assessee opted to avail nil rate of duty with effect from 8th April, 2004 under the said Notification No. 50/2003. At that stage, the assessee had already availed CENVAT credit under the Rules, amounting to ₹ 4,78,260/- on inputs/work in progress/finished goods. The Superintendent, Central Excise, Range Haridwar, directed the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., 2004 (169) ELT 205. The Commissioner held that CENVAT credit on the inputs lying in stock as well as contained in the finished goods lying in stock at the time of option was not available to the assessee. Aggrieved by the said order, the assessee preferred an appeal before the Customs Excise and Service Tax Appellate Tribunal, which was allowed by an order dated 8th February, 2009. The Tribunal relied upon a decision of the Tribunal in the case of TAFE Limited (Tractor Division) vs. The Commissioner of Central Excise, Bangalore, 2007 (210) ELT 571 as well as the decision of the Supreme Court in Dai Ichi Karkaria s case (supra) as well as the decision of the Kerala High Court in Collector of Central Excise and Customs vs. Premier Tyres Ltd., 2001 (130) ELT 417. The Tribunal held that the Cenvat credit validly taken and utilized could not be reversed. The Tribunal further held that the assessee having correctly taken the credit when the final product was dutiable, there was no requirement to reverse the credit on the final product becoming exempted and that such credit could not be recovered under Rule-12 of the Rules. The Department, being aggrieved by the aforesaid decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is extracted hereunder: Rule 6. Obligation of manufacturer of dutiable and exempted goods.- (1) The CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in the circumstances mentioned in sub-rule (2). The Department is also relying upon Rule 9(2) which provides for reversal of CENVAT credit in respect of inputs lying in stock or in process or contained in the final product. Rule 9(2) is extracted hereunder: Rule 9 (2).- A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture of the final product, on which excise duty is payable. If the excisable duty is withdrawn subsequently, or the final product becomes exempted from payment of excise duty by means of a notification, the CENVAT credit so taken and utilized cannot be reversed nor can the Department insist that the CENVAT credit should be reversed in view of Rule 6(1) of the Rules of 2002. In our view, Rule 6 is applicable at the stage when inputs are received in the factory of the manufacturer and if the inputs are received for the manufacture of a product, on which excise duty is payable, then a valid CENVAT credit is available to a manufacturer. Consequently, Rule 6 would not apply. Even Rule 9(2) would not apply for reversing a valid CENVAT credit where subsequently the inputs have been used for manufacture of the same product which has become exempted from payment of excise duty by means of a subsequent notification. The reason is clear that there is no provision for reversal of a CENVAT credit. This view of ours is fortified by a decision of the Supreme Court in Dai Ichi Karkaria s case (supra), wherein the Supreme Court, after considering the scheme of the CENVAT Credit Rules, held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chin vs. Premier Tyres Ltd., 2001 (130) ELT 417 held that if at the time of taking the credit the final product was not exempted, it was not necessary to reverse the entry in the light of a subsequent notification relating to the end product. In Commissioner of Central Excise Panchkula vs. M/s HMT (TD) Ltd. Pinjore, District Panchkula, the Punjab Haryana High Court held that the assessee was entitled to the benefit of CENVAT credit for the inputs utilized in the manufacture of the final exempted product and the same could not be reversed. In the light of the aforesaid, we approve the decision of the Tribunal in the case of Commissioner of Central Excise, Rajkot vs. Ashok Iron and Steel Fabricators, 2002 (14) ELT 277, Raguhvar (India) Ltd. vs. Commissioner of Central Excise, Delhi, 2002 (140) ELT 280 and TAFE Limited (Tractor Division) vs. The Commissioner of Central Excise, Bangalore, 2007 (210) ELT 571, which has been affirmed by the Supreme Court of India by an order dated 16.09.2011. The learned counsel for the appellant submitted that in Central Excise Appeal No. 4 of 2008, the Commissioner (Appeals) had directed the refund of the credit in cash. The learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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