TMI Blog2013 (4) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ger be a good law. - Decided against the assessee. - E/384/2006 - A/722/2012-EX(BR)(PB) - Dated:- 25-6-2012 - Justice Ajit Bharihoke, Shri Rakesh Kumar, JJ. REPRESENTED BY : Shri O.P. Agarwal, C.A., for the Appellant. Shri Sumit Kumar, AR, for the Respondent. [Order per : Rakesh Kumar, Member (T)]. - The appellant manufacture Pickaxe/Shovel/Hoes chargeable to Central Excise duty under sub-heading 8201.00 of the Central Excise Tariff. They were availing cenvat credit of Central Excise duty paid on inputs used in or in relation to their final products. These products were dutiable, till the same were fully and unconditionally exempted from whole of the duty by Notification No. 23/2004-C.E., dated 9-7-2004. As on 8-7-2004, the appellant had some inputs in stock and also the inputs in process and contained in the finished products in stock. The finished products in stock as on 8-7-2004 and the finished products manufactured out of the inputs in process were cleared at nil rate of duty after 8-7-2004. Thus, w.e.f 9-7-2004, finished products manufactured by the appellant became exempted goods within the meaning of this term as defined in Rule 2(d) of the Cenvat Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded the impugned order by relying on the judgment of the Division Bench of the Tribunal in the case of Ranbaxy Laboratories Ltd. v. CCE, Chandigarh reported in 2010 (253) E.L.T. 578 (Tribunal-Delhi), wherein the Division Bench relying upon the Apex Court s judgment in the case of Commissioner of Central Excise v. Gujarat Narmada Fertilizers Co. Ltd. reported in 2009 (240) E.L.T. 661 (S.C.) held that in such a situation, the Cenvat credit would be required to be reversed. 5. We have carefully considered the submissions from both the sides and perused the records. 6. In this case till 8-7-2004, the finished products manufactured by the appellant were dutiable and the appellant were availing Cenvat credit of central excise duty paid on the inputs used in or in relation to the manufacture of the final products. The final products became fully exempt from duty by Notification No. 23/2004-C.E., dated 9-7-2004. Rule 2(d) of the Cenvat Credit Rules, 2002 defines exempted goods as the goods which are exempt from whole of the duty leviable thereon and includes the goods which are chargeable to nil rate of duty. Thus, there is no doubt that w.e.f 9-7-2004, the final product of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or duty paid on inputs used in the manufacture of exempted final products is not allowable. This principle is in-built in the very structure of the CENVAT scheme. Sub-rule (1), therefore, merely highlights that principle. Sub-rule (1) covers all inputs, including fuel, whereas sub-rule (2) refers to non-fuel-inputs. Sub-rule (2) covers a situation where common cenvated inputs are used in or in relation to manufacture of dutiable final product and exempted final product but the fuel-input is excluded from that sub-rule. However, exclusion of fuel-input vis- -vis non-fuel-input would still fall in sub-rule (1). As stated above, sub-rule (1) is plenary, hence, it cannot be said that because sub-rule (2) is inapplicable to fuel-input(s), CENVAT credit is automatically available to such inputs even if they are used in the manufacture of exempted goods. The cumulative reading of sub-rules (1) and (2) makes it abundantly clear that the circumstances specified in sub-rule (2), which inter alia requires separate accounting of inputs, are not applicable to the fuel-input(s). However, the said sub-rule (2) nowhere says that the legal effect of sub-rule (1) will stand terminated in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision for its reversal except when the same has been illegally taken and that the credit so taken is indefeasible. On this basis, the Apex Court after discussing the costing principles, has held that the excise duty whose modvat credit has been validly taken will not form part of the assessable value of the intermediate products. In this judgment, the question whether a manufacturer would be eligible for Cenvat credit in respect of inputs lying in stock, which on account of the final products becoming fully exempt from duty have been used in the manufacture of exempted goods, would be available or not was nowhere discussed. Rule 57H(7) in this regard which specifically provided for reversal of modvat credit availed on inputs lying in stock or in process or contained in final products lying in stock, by a manufacturer availing full duty exemption under a notification based on value or quantity of clearances in a financial year, at the time when the manufacturer changes from duty paying statuts to full exemption status, was nowhere discussed, as this was not the question before the Hon ble Court. In our view, this question has been addressed by the Apex Court only in its judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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