TMI Blog2016 (10) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... came exempted. As regard the specific provision brought under Rule 11(3) of Cenvat Credit Rules, 2004, the same was observed by the Hon’ble Madras High Court in case of Tractor and Farm Equipment Ltd Vs. CCE [2016 (1) TMI 1006 - SUPREME COURT] wherein it was held that The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. Reversal of Modvat credit not justified – appeal allowed – decided in favor of appellant. - E/2097/10 - A/86555/16/SMB - Dated:- 2-3-2016 - Mr Ramesh Nair, Member(Judicial) Shri. Rajesh Ostwal, Advocate for the Appellants Shri. S.V. Nair, Asstt. Commissioner(A.R.) for the Respondent ORDER This appeal is directed against Order-in- Appeal No. SB(43-44) 43-44/MI/2010 dtd. 27/8/2010 passed by the Commissioner(Appeals) Central Excise, Mumbai Zone -I, whereby Ld. Commissioner(Appeals) upheld the Order-in-Original dated 28/11/1997 and rejected the appeal of the appellant. 2. The issue involved in the present case is that whether the appellant is required to reverse the Modvat credit in respect of input lying in the stock on the date when the final product be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notification was issued. I observed that specific provision was introduced under Rule 11(3) of Cenvat Credit Rules, 2004 w.e.f. 1/3/2007 only. I find that specific provision was brought in the statute which clearly shows that for the previous period there was no requirement of reversal of credit on the input. When the credit was availed, final product was dutiable and subsequently got exempted. On this very issue much water has been flown and in the judgments cited by the Ld. Counsel it has been consistently held that the Modvat credit need not to be reversed on the stock of input lying in stock when the final product became exempted. In the case of Ashok Iron Steel Fabricators(supra) the larger bench of this tribunal which was upheld by the Hon ble Supreme Court, held as under : 6 .Before the Supreme Court the Attorney General drawing support from the decision in Super Cassettes Industries Ltd. contended that there could be no final credit until the inputs were used and excise duty on the final product was paid or the inputs were otherwise disposed of. The submission was that the credit was a contingent credit. It might be disallowed under certain circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) Ltd. [2000 (118) E.L.T. 311 (S.C.) = 2000 (38) RLT 777 (S.C.)] (3) Chandrapur Magnet Wires (P) Ltd. [1996 (81) E.L.T. 3 (S.C.)] (4) CCE, Vadodara v. Dhiren Chemical Industries [2002 (139) E.L.T. 3 (S.C.)] and took us through those decisions. We find that none of these decisions relate to the issue with which we are concerned. We are not informed that a later decision of the Supreme Court has taken a different view from Dai Ichi Karkaria Ltd. In view of the above, we are bound by the dictum laid down by the Suprme Court in Dai Ichi Karkaria Ltd. Since the issue is now covered directly by a decision of the Apex Court, we find it not necessary to place the matter before a Bench of 7 Members even though a Bench of 5 Members has taken a contra view in Khanbhai Esoofbhai. In case of CCE Vs. United Vanaspati Hon ble P H High court passed following order: 7 . It is pertinent to mention here that the Apex Court in Collector of Central Excise, Pune and others v. Dai Ichai Karkaria Ltd. and Others 1999 (112) E.L.T. 353 (S.C.) = 1999 (7) SCC 448 considered a similar question relating to the reversal of Modvat credit under Central Excise Rules, 1944. Rule 57H(5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been taking of cenvat credit on inputs before such option is exercised, he 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 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 not be allowed to be utilized for payment of duty on excisable goods, whether cleared for home consumption or for export. 10 . The language of Rule 57H(5) of the Excise Rules and Rule 9(2) of the Cenvat Rules is identical, therefore, the decision also has to be similar. 11 . It would also be pertinent to mention here that the High Court of Kerala in Collector of Central Excise and Custom, Cochin v. Premier Tyres Ltd. - 2001 (130) E.L.T. 417 following the judgment of the Apex Court answered a similar question in favour of the assessee and against the Department. 12 .It would also be pertinent to mention that the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of in Dai Ichi Karkaria Ltd. case, referred supra, which has very clearly set out the position as to how the credit taken on inputs should be utilized. To sum up, paragraph 17 of the Dai Ichi Karkaria Ltd. case, referred supra, which answers the present issue, is extracted hereunder : 17. It is clear from these rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgment thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the rules which provides for a reversal of the credit by the Excise Authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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