TMI Blog2018 (1) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent M/s.Wipro Ltd, Unit II, Puducherry (hereinafter called Wipro ) is engaged in the manufacture of Computers and parts of Computer falling under Chapter heading 8471 of the First Schedule to the Central Excise Tariff Act, 1985. 3. Wipro were availing CENVAT credit of duty paid on components/inputs, used in the manufacture of Computer and parts of Computer, as provided under Rule 3 of the CENVAT Credit Rules, 2002 and 2004 (in short CCR), and were paying duty, on Computer cleared from their factory, upto 08.07.2004. With effect from 09.07.2004, full exemption from payment of Central Excise duty was granted, vide Notification No.6/2002-CE dated 01.03.2002, as amended by Notification 23/2004 CE dated 09.07.2004.The total credit involved in the inputs, lying in stock, as such or contained in the finished goods/semi-finished goods, as on 08.07.2004, worked out to ₹ 2,06,98,063/-, is not allowable in terms of rule 6(1) of the CCR, 2002, as such inputs have been used or intended to be used in the manufacture of exempted final products. 4. Rule 6(1) of CCR, 2002, as it stood, at the time, read, Cenvat credit shall not be allowed, on such quantity of input, which is used in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is filed by the Commissionerate of Central Excise, Puducherry, on the following substantial question of law:- 1) Whether the CESTAT is right in holding that credit once validly taken need not be reversed if the final products becomes exempted subsequently in view of Rule 6(1) of CCR, 2002 which mandates reversal of credit in respect of inputs used in exempted final products? 8. Supporting the substantial question of law, Mr.A.P.Srinivas, learned counsel for the appellant, submitted that the decision of CESTAT that there is an indefeasible right to CENVAT credit, which cannot be denied or foregone, unless otherwise required by law, for extinguishment of such right, and abridgment of the vested, right is recognised by law with effect from 01.03.2007 incorporating sub-rule 3(2) to Rule 11 of CENVAT Credit Rules, 2004, is not legal and proper approach as per CENVAT Credit Scheme. 9. According to him, the basic object of CENVAT Credit Scheme, is to avoid, cascading effect of duties, on the price of the final product. It is in that view only, the duty paid on the inputs is given back to the manufacturer as credit, if the final product, is cleared on payment of duty. Otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant submitted that the same reasoning, is followed in SSI the exemption notification. When an unit is availing SSI exemption, CENVAT credit, on the inputs and inputs services, is not allowed, since the final goods, are to be cleared under exemption, without payment of duty. But once the exemption limit of ₹ 1.50 crore is crossed, the manufacturer is allowed to take credit of the duty on inputs, lying in stock or contained, in the semi-finished/finished goods, as transitional credit, since from that point of time, the finished goods will be cleared on payment of duty. Again, when the manufacturer opts to avail SSI exemption for the next year, he will have to expunge the credit relating to the inputs lying in the stock or contained in the semi-finished/finished goods, at the time of re-opting for SSI exemption. 12. Mr.A.P.Srinivas, learned counsel for the appellant contended that this is the essence and mainstay of the CENVAT credit scheme. He therefore, submitted that when the final product, becomes exempt from duties, the manufacturer's entitlement to avail the CENVAT credit, ceases. 13. Learned counsel for the appellant submited that As per Rule 6(1) of CEN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit the debit entry, the same was wrong. 18. Mr.A.P.Srinivas, learned counsel for the appellant further submitted that CESTAT, Madras, ought to have considered the decision of Delhi Tribunal, in the case of Albert David Ltd Vs CCE, Meerut reported in 2003 (151 )ELT 443 (Tri. Del) wherein, it has been held, under para 5 that there is specific provision in Rule '57AD which clearly provides that, CENVAT credit shall not be allowed on such quantity of inputs, used in the manufacture of exempted goods. Rule 57AH contains provision, for the recovery of CENVAT credit utilised wrongly. As the inputs have been utilised in the manufacture of wholly exempted goods, credit taken, in respect of such inputs, is recoverable . 19. Learned counsel for the appellant submitted that CESTAT, Madras, has come to the conclusion that CENVAT credit is an indefeasible right to the manufacturer, in terms of para 17 of the Hon'ble Apex Court's decision, in the case of CCE, Pune Vs Dai Ichi Karkaria Ltd reported in 1999 (112) ELT 353 (SC) where in the issue decided by the Hon'ble Apex Court was with regard to the cost of the raw material, which required to be taken into account in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich mandates reversal of credit in respect of inputs used in exempted final products ? 3. Even according to Mr.Srinivas, the learned counsel appearing for the Revenue, the question of law raised is covered by the Division Bench of this Corut rendered in Tractor and Farm Equipment Ltd. Vs. Commissioner of Central Excise, Madurai - II [2015 (320) E.L.T.357 (Mad)]. 4. We are informed that SLP preferred against the said Judgment was dismissed by the Supreme Court. Accordingly, this appeal will have to be dismissed. It is ordered accordingly. The question of law is answered in favour of the Assessee and against the Revenue. 23. Though, Mr.A.P.Srinivas, learned counsel for the appellant, made submissions of above, going through the material on record, and the decisions relied on, we are of the view that the decision of Hon'ble Court in C.M.A.No.2737 of 2015, dated 19.06.2017, in the matter of Principal Commissioner of Central Excise, Chennai Vs. M/s.TVS Electronics Limited, Chennai, is squarely applicable to the facts of the case on hand. Decision of this Court, is binding on us. Following the same, instant Civil Miscellaneous Appeal is dismissed. No Costs. Substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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