TMI Blog2016 (10) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... l of Cenvat credit already availed and also lying in books of accounts of the appellant. No fresh credit can be taken from 01/04/2008 on any inputs as the appellants were manufacturing only exempted goods from that date and they are not covered by the credit scheme during that period. Regarding imposition of penalty u/r 15 (1) of CCR, 2004, except for credits availed after 01/4/2008, the appellant is not liable to reverse/lapse the other credits duly taken, it is right and proper to reduce the penalty to ₹ 1 lakh on the appellant. Appeal disposed off - decided partly in favor of assessee. - Excise Appeal No. 3484 of 2010 - 53948/2016 - Dated:- 5-10-2016 - Dr. Satish Chandra (President) And B. Ravichandran (Technical Member) For the Appellant : A. K. Sharma, Sr. Vice President For the Respondent : Yogesh Agarwal, Authorized Representative (DR) ORDER B. Ravichandran (Technical Member) The appeal is against order dated 04/08/2010 of Commissioner of Central Excise, Jaipur I. The appellants are engaged in the manufacture of writing paper and news print paper. They were availing Cenvat credit of duty paid on inputs, capital goods and input servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, it is very clear that the appellants continue to avail credit even after 01/04/08 when they are not liable to pay any Central Excise duty on their final products. This is a clear violation of Rule 6 (1) of Cenvat Credit Rules, 2004. The various case laws cited by the appellant are not on the facts of the present case. None of the decisions are on the applicability of Rule 11 (2) of Cenvat Credit Rules, 2004. The statutory provision is very clear and there is no reason to deviate the findings of the Original Authority. 5. We have heard both the sides and perused the appeal records. The three points are all inter-connected to the issue of appellant availing exemption under Sl. No. 90 of Notification No. 4/2006-CE. On the first point regarding Cenvat credit of duty availed on inputs and input services received by the appellant on or after 01/04/2008 it is clear that such credits are availed in violation of Rule 6 (1) of Cenvat Credit Rules, 2004. The provisions of said rule clearly states that the Cenvat credit shall not be allowed on such quantity of input used in or in relation to manufacture of exempted goods. As such, the manufacturer is not eligible to avail any cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct exempted from duty. However, as per the assessee, this Rule comes into operation only after the date when the final product is exempted and there was no legal provision requiring it to reverse the credit which it had taken prior to the date of the issuance of the exemption notification. The Assistant Commissioner did not accept the plea of the assessee and dis-allowed credit of ₹ 93,584/-. The assessee filed an appeal and the Commissioner (Appeals) upheld the order of the Assistant Commissioner. Thereafter, the assessee approached the Customs, Excise Service Tax Appellate Tribunal (CESTAT) which allowed the appeal in view of the law laid down by a Five Member Bench in CCE, Rajkot v. Ashok Iron Steel Fabricators reported in 2002 (48) RLT 789. The main argument of Shri Sandeep Sharma, learned Assistant Solicitor General of India is that in the case of Ashok Iron Steel Fabricators, the Tribunal held that there was no rule which permitted the department to seek reversal of the Modvat credit. He relies upon Rule 9(2) of the Cenvat Rules in this behalf. It is pertinent to mention here that the Apex Court in Collector of Central Excise, Pune and others v. Dai Kark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... envat Rules reads as follows :- A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods 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. 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. 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such inputs, as the final product is exempted from payment of tax, the assessee would not be entitled to avail the Cenvat credit on such inputs. But the Cenvat credit availed on such inputs till the date of exemption, vest in the assessee and the assessee cannot be divested of that credit as the law does not provide for the same. The Court further held that Revenue cannot take advantage of the notification exempting the final product and claim reversal of Cenvat credit either in respect of final product which have come into existence on the date of the notification or on the inputs stored in the godown or the work in progress and finished products. Significantly, SLP (Civil) CC 14763/2011, titled as Commr. of Cen. Exc. Bangalore v. M/s TAFE Limited, Doddaballapur, assailing the aforesaid judgment stands dismissed by the Apex Court vide its order dated 16-9-2011. 17. In the instant case, there is no dispute that credit claimed is with regard to the goods manufactured prior to the year 2005. 18. In Eicher Motors Ltd. v. Union of India, 1999 (106) E.L.T. 3 (S.C.), while interpreting Rule 57F(4A) of Central Excise Rules, 1944, which are almost similar to the instant Rules, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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