TMI Blog2007 (10) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... t Wires (P) Ltd. v. CCE, Nagpur - 1996 (81) E.L.T. 3 (S.C.) and noting the fact that the appellants had reversed the credit along with interest before the issue of show cause notice allowed the stay application. 3. The learned departmental representative during the hearing of the stay application had pointed out to the Larger Bench judgment rendered in the case of Rallies India Ltd. v. CCE, Salem - 2007 (208) E.L.T. 25 (Tri.- LB). It was distinguished by the learned Sr. Counsel arguing the stay application and pointed out to another judgment in the case of Texmo Industries v. CCE, Coimbatore - 2007 (208) E.L.T. 338 (Tri.-LB) which is also a Larger Bench judgment. In view of these judgments and the reversal of credit having been done in the case, therefore, the Revenue's direction to the appellant to pay 10% of the value of the final products was not accepted and full waiver was granted by Stay Order No.672/2007 dated17-8-2007. 4. In other three appeals i.e., in appeal No. E/50/2007 of M/s. Kedia Overseas Ltd.; Appeal No. E/97/2007 of M/s. Sarda Agro Oils Ltd. and E/83/2007 of M/s. Sudha Agro Oils Chemical Industries Ltd., the appellants manufactured final prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner in the Para-wise comments does not appear to be tenable. The appellants have already reversed the credit availed by them on inputs, therefore, the question of raising demands which are 400 times then the duty leviable does not appear to be justified. The Commissioner has not given out the working of the duty arrived at by the revenue despite directions given in the interim stay order. The appellants have shown prima facie case in their favour and also they have pleaded financial hardship. For all these reasons, the stay application is allowed unconditionally granting full waiver of pre-deposit and staying its recovery till the disposal of the appeal. As the amounts involved in this appeal are huge, matter can be taken up for out of turn hearing on 10th May 2007." In terms of the stay order, matter has come up for final hearing today. Learned counsel has filed a paper book comprising of 25 judgments in his support and submitted that the issue is covered and contended that the issue is fully covered in terms of the judgments cited by him which includes even the rulings of this bench as rendered in Hetero Drugs Ltd. The finding of the said Final Order No. 1518 151 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such a demand over Rs.2 crores when the credit involved is only Rs. 4.29 lakhs is unjust especially when the appellants had already reversed credit. The Apex Court in the case of Chandrapur Magnet Wires Pvt . Ltd., v. CCE, Nagpur - 1996 (12) RLT I (S.C.) = 1996 (81) E.L.T. 3 (S.C.) has held that the reversal of credit on input used in the manufacture of final products amount to non availment of credit on inputs used in the exempted products and consequently the assessee was eligible for the benefit of the notification as the assessee was not availed of the credit. Applying ratio of this decision, we hold that when the credit attributable on the inputs used in the exempted product is reversed, there is no justification to demand 8% of the sale amount. In view of the above observations, we allow the appeal with consequential relief" 5. The finding recorded in Forbes Gokak Mills in Para 4 is reproduced herein below. "4. On a careful consideration, we agree with the learned Counsel that the issue is covered in their favour in terms of the ruling rendered by this bench in the case of Reid and Taylor by Final Order No. 866/06 dated 5-5-06. The finding recorded i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the goods cleared free of duty before the removal, of the goods from the factory. The Chandrapur Magnets case is squarely applicable to the facts of the case. In that view of the matter, one can safely say that no input credit had been availed. Hence, the condition of non-availment of input credit in respect of Notification 30/2004 is satisfied. The OIA cannot be sustained. The same is set aside. We allow the appeal with consequential relief if any." 6. Learned senior counsel submits that in view of the issue being settled, the impugned is required to be set aside. 7. Learned JCDR refers to the written submissions filed by the Commissioner. However in his usual fairness contended that he is not in a position to distinguish the judgments. Although the Commissioner has filed his reply contending that despite reversal of credit they are required to pay 10% of the value of the exempted goods cleared during the period. 8. On a careful consideration, we are of the considered opinion that the issue in this appeal is no longer res-integra as the matter has been decided by all the citations referred by Senior counsel and the extract of the judgment cited above. 6. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la Agro Oil Products Ltd. as noted in Final Order No. 1159/2007 dated 3-10-2007 [2008 (223) E.L.T. 441 (Tri.)]. That case clearly refers to the entire position and has noted that even after the amendment to the Rule 6, the assessee is not required to pay 8% or 10% of the value of the exempted goods in view of the reversal of the Modvat credit. 8. The learned JCDR distinguished the 5-Member Larger Bench judgment cited by the Sr. Counsel as in the case of Franco Italian Co . (supra) and that of Icon Pharma Surgical Put. Ltd. Ors . (supra) on the ground that both the Larger Bench judgment was during the circumstance when there was provision of law for reversal of credit in respect of Rule 57-I of the Cenvat Credit Rules. 9. The learned Sr. Counsel counters that the Revenue reliance on the Larger Bench of Rallies India Ltd . (supra) is not justified for the reason that the issue in that case did not deal with reversal of credit and the bench itself has categorically stated about it in Para 14. He also submits that the Rallies India Ltd . (supra) has been distinguished in M/s. Satyakala Agro Oil Products Ltd . which arose after amendment to the Rules and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld mean not taking the credit at all. This issue was not put up before the Larger Bench and this issue was not decided by the larger bench in the Rallies case (supra). However, we note that Supreme Court in the case of Chandrapur Magnet Wires Pvt. Ltd . (supra) which we had already mentioned held that on reversal of Modvat credit assessee cannot be said to have been taken credit of duty on the inputs utilized in the manufacture of exempted final products. In other words, a reversal of credit would amount to not taking the credit at all. The ratio of this decision has been followed by this bench in several cases. In the present case, even though the credit attributable to the exempted product is only Rs.2,66,535/- the 8% comes to an exorbitant amount of Rs.37,16,263/-, it is somewhat of the order of 13 to 14 times the credit attributable to the exempted products. It would be really unjust to demand such an enormous amount when the credit attributable to the exempted product is only a paltry sum of Rs.2,66,535/-. Moreover, the learned advocate cited a Board Circular dated 16-10-2001, wherein it has been clearly held that when separate account is not maintained and when 8% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on will follow. 4.4 In the present case, it is not in dispute that the appellant had reversed the entire credit along with interest attributable to the exempted products. Therefore, following the ratio of the Chandrapur Magnet Wires case (supra), we hold that the appellants had not taken any credit at all in view of the reversal. lf it is held that the appellants had not taken any credit of the inputs used in the exempted product, then Rule 6 would not be applicable. If Rule 6 is not applicable, the appellant is not required to pay 8% or 10% of the sale value of the exempted products. In view of the above observations, we set aside the impugned order and allow the appeal with consequential relief. As can be seen from the above ruling the facts have been clearly noted which is identical to the facts in these cases. These facts have already been noted in the case of M/s. Ruchi Soya Industries Ltd. v. CCE, Mangalore rendered by this Bench by Final Order No. 588/2007 dated 18-5-2007 and applied the ratio of the Apex Court rendered in the case of M/s. Chandrapur Magnet (supra). The finding rendered in M/s. Ruchi Soya industries Ltd . has already been extracted supra. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g credit. Hence, in this case, both the conditions are satisfied. Hence item No.1 of the table to Notification No.14 /2002-C.E. would apply and accordingly the grey fabrics would attract nil rate of duty." It is also seen that the Apex Court has gone through the ratios of the judgments of High Court and Tribunal and it has been clarified that once credit has been reversed, the benefit of exemption notification is required to be extended. The same ratio applies to a situation arising in these appeals. 11.2 Although the learned JCDR attempted to distinguish the judgment of CCE, Mumbai-I v. Bombay Dyeing Mfg. Co. Ltd . (supra) and also in the case of Franco India Ltd . (supra) and Icon Pharma Surgical Pvt. Ltd. Ors. v. CCE on the ground that in these cases the credit had been reversed after the goods were cleared, however, we notice that even though the assessee has delayed in reversing the credit, but they had paid interest for the delayed reversal. Therefore, the question of directing the assessee to pay 8% or 10% of the value of the exempted goods which runs to an exorbitant 340% is not justified and proper. The prayer of the appellants for availing the be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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