TMI Blog2010 (10) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... g the cost of an excisable product covered by the Modvat scheme under Section 4(1)(b) of the Act read with Rule 6 of the Valuation Rules the excise duty paid on raw material also covered by the Modvat scheme is not to be included. Appeal dismissed - decided against Revenue. - Tax Appeal No. 2161 of 2009 - - - Dated:- 13-10-2010 - MR. K.A.PUJ AND E MS. E H.N. DEVANI JJ. MS Naynaben K Gadhvi for the Appellant. Mr. Anand Nainawati with Mr. Jigar Shah with Mr. BL Narasimhan for the Respondent. ORDER (Per : HONOURABLE MR.JUSTICE K.A.PUJ) 1. The appellant revenue has filed this Tax Appeal under Section-35G of the Central Excise Act, 1944 proposing to formulate the following substantial questions of law for determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re within the meaning of clause (f) of Section-2 of the Central Excise Act, 1944. In view of the said decision, the respondent unit stopped paying duty on the clearances of FBE Coated Bars after 31.7.2003. The unit was availing Cenvat credit on inputs upto 31.7.2003 under Cenvat Credit Rules, 2002, hence as on 31.7.2003 i.e. on the date of stopping of payment of duty, they were having balance of 252.578 M.T. finished product i.e. FBE coated bars in which the inputs 'Bare Bars' and 'Epoxy Powder' were used on which the unit had availed cenvat credit. The said 252.578 M.T.FBE Coated Bars were cleared from the factory without payment of duty after 31.7.2003 in view of the above referred CESTAT order. 6. The respondent unit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrectly when the final product was dutiable, cannot be held to be reversible, when the final product becomes exempted subsequently. 9. It is this order of CESTAT which is under challenge in the present Tax Appeal. 10. Ms. Naynaben Gandhvi, learned Standing Counsel appearing for the revenue has submitted that as per the provisions contained in Rule-3 of the Cenvat Credit Rules, 2002 a manufacturer can take credit of duty paid on input; used in the manufacture of dutiable goods and also inputs lying in stock inputs in process and inputs contained in final products lying in stock on the date on which goods cease to be exempted goods or goods become excisable. She has further submitted as per Rule-6 of the Cenvat Credit Rules, 2002 Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in which event it stands cancelled or, if utilised, has to be paid for. She has submitted that in the present case the Rules clearly state that the use of goods in exempted final products is a situation which calls for denial or Cenvat credit. Therefore, the credit taken becomes illegal as the inputs in question were used in the manufacture of exempted final products. She has further submitted that the issue involved in Dai Lchi Karkaria case before the Apex Court was whether the Modvatable portion of the value of the inputs was liable to be included in the assessable value of the finished product and hence the said decision cannot be applied to the facts of the present case. She has, therefore, submitted that the order passed by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat Credit Rules is identical to that of Rule- 57H(5) of the Excise Rules, the interpretation given by the Apex Court has to apply in the present case also and, therefore, even though the final product may be exempt from payment of excise duty, the assessee cannot be asked to reverse the Modvat credit already taken by it. 13.Mr. Nainawati has further relied on the decision of Rajasthan High Court in the case of Hindustan Zinc Ltd., Vs. Union of India, reported in 2008 (223) ELT 149 (Raj.), wherein the Court has taken the view that in the background of the Modvat credit scheme in respect of duty paid on inputs at the time of receipt thereof by the manufacturer of final product from the date of receipt of acknowledgment of his declaration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been dismissed on 11.11.2002. 16.Considering the aforesaid legal position Mr. Nainawati has submitted that the Tribunal has taken the correct decision in law as well as on facts and the same cannot be interfered with. Since the law is settled on this aspect, the Appeal is not required to be admitted and no substantial question of law can be said to have arisen out of the order of the Tribunal. 17. Having heard learned counsels appearing for the parties and having considered relevant rules and statutory provisions in light of the case law discussed hereinabove we are of the view that the Tribunal has taken the correct view in the matter by applying law laid down by the Apex Court in the case of Collector of Central Excise, Pune Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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