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TMI Blog2007 (10) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... B). 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 products edible oil. There was an emergence of by-product. They had reversed the credit in this case also and Revenue proceeded to direct the appellants to pay 10% of the value of the goods and relied on Larger Bench judgment rendered in the case of Rallies India Ltd. (supra). However, in view of the stay granted in the case of M/s. Ruchi Infrastructure Ltd., their stay applications were also allowed. 5. All the four appeals have come up for final h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 & 1519/2005 dated 26-8-05 is reproduced herein below "6. We have gone through the records of the cases carefully. The issue of availing Cenvat credit in respect of common inputs used for dutiable and exempted products is subject matter of litigation in several disputes. The judicial fora have clearly enunciated the principle that once the credit availed in respect of the exempted products is reversed there is no need for payment of duty at 8% of the sale value of the exempted goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in Para 4 to 6 is reproduced herein below: - 4. The learned Advocate, relied on the decision of the Apex Court in the case of Chandrapur Magnet Wires (P) Ltd. v. CCE, Nagpur - 1996 (81) E.L.T. 3 (S.C.) wherein it is held that, on reversal of Modvat credit, the assessee cannot be said to have taken credit of duty on the inputs utilized in the manufacture of the exempted final products. Consequently, exemption from duty is not deniable to final product even if the exemption Notification stipulates a condition that ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. The learned JCDR submits that the Revenue has filed an appeal against the final order cited supra before the High Court. However, he submits that he has to check up as to whether the Hon'ble High Court has granted stay or not, The main contention is that the Larger Bench judgment in the case of Rallies India Ltd. (supra) has clearly held that they are required to pay 8% of the value of the final products. However on being pointed to the JCDR that this point was considered by this Bench in the case of M/s. Satyakala Agro Oil Products Ltd. by Final Order No. 1159/2007 dated 3-10-2007 [2008 (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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 the situation is common in the present case. 10. The learned JCDR again presses for applying the ratio of the Tribunal's order rendered in the case of Sidharth Soya Products Ltd. v. CCE - 2007 (211)E.L.T. 57 (Tri.-Del). In counter Sr. Counsel submits that the ratio of Sidharth Soya Products Ltd. (supra) stands distinguished in M/s. Satyakala Agro Oil Products Ltd. rendered by this Bench. The learned JCDR submits that as the Bench in M/s. Satyakala Agro Oil Products Ltd. has taken a different view and therefore, the matter should be referred to a Larger Bench of 5-Member. 11. We have carefully considered the submissions made by both sides. We take up the plea of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the sale value is not paid it has been stated that the recovery of credit attributable to the exempted product would be in order. Circular: 591-28-2001-CX., dated 16-Oct-200l Recovery of amounts not duty paid under provisions of Rule 6 of Cenvat Credit Rules, 2001 Circular No. 591 /28/2001-CX, dated 16-10-2001 F. No. 267/58/2001-CX.8 Government of India Ministry of Finance (Department of Revenue) Central Board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 11.1 We note from the submissions of Sr. Counsel that the Larger Bench of 5-Members in the case of Franco Italian Co. (supra) has already dealt with this matter and has held that once credit is reversed then in that event the assessees are eligible for the benefit of exemption notification. This rule has also been followed by another Larger Bench judgment in the case of Icon Pharma & Surgical Pvt. Ltd. & Ors. v. CCE. we notice that all the four asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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