2005 (8) TMI 738

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..... ts are manufacturers of bulk drugs and drug intermediaries. Out of the 56 drugs manufactured by the appellants, about 11 are exempted from payment of duty and rest are dutiable. The appellants availed CENVAT credit on duty paid on the inputs. Some of the inputs used by the appellants which are used in both dutiable and exempted final products. In respect of common inputs used for the manufacture o .....

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..... Shri G. Shivadas, Ld. Counsel appeared for the appellants and Shri Ganesh Hanuvar, ld. DR for the Revenue. 3. Ld. Counsel adduced the following points: (i) The reversal of CENVAT credit by he appellants satisfies the Rule 6 of the CENVAT Rules. The following case law were relevant to the cases. (a) Dharamsi Morarjee Chemicals Co. Ltd. v. CCE 2001 (138) ELT 164 (b) CCE v. SPM Instruments Ind .....

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..... EX dated 19.8.2002 and Circular No. 739/55/2003-CX dt. 28.8.2003. Once the credit availed on the inputs has been reversed before the utilization in the final product it cannot be said that the inputs on which the credit has been availed have been used in the manufacture of exempted product. The Tribunal in the case of CCE, Jaipur v. Raja Ram Marbles P. Ltd. and Ors. reported in 2004 (64) RLT 138 ( .....

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..... under Section 11AB are not sustained. 5. Ld. SDR reiterates the contents in the orders of the lower authorities. 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 for a have clearly enunciated the principle that once .....

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..... Modvat credit is permissible to avail exemption. Therefore, we hold that the orders in Appeal and Orders-in-Original cannot be sustained. We allow the appeal with consequential relief. There is also no justification for invoking the extended period as the fact of reversal of the Modvat credit had been intimated to the department in ER 1 Return. Both the appeals are allowed. (Operative part pronou .....

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