TMI Blog2009 (11) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... nal product may be exempt from payment of excise, the assessee cannot be asked to reverse the Modvat credit already taken by it – answered in favor of assessee - 10 of 2006 - - - Dated:- 10-11-2009 - Justice Deepak Gupta, J. and Justice V.K. Ahuja, J. Mr. Sandeep Sharma, Assistant Solicitor General of India for the appellant. Ms. Jyotsana Rewal Dua, Advocate for the respondent. [Judgment per : Deepak Gupta, J.]. - This appeal was admitted on the following substantial question of law:- "Whether Rule 9(2) of Cenvat Credit Rule 2002 provides that manufacturer shall be required to pay an amount equivalent to the Cenvat Credit allowed to him in respect of inputs lying in stock or in process or contained in final product lyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice asking assessee to reverse the credit of Rs.98,240.81. The assessee contested the notice on various grounds and relied upon the judgment of the Larger Bench of the Tribunal Commissioner of Central Excise, Rajkot Vs. Ashok Iron Steel Fabricators, 2002 (140) ELT 277 and several judgments of other High Courts. The demand was confirmed by the Assistant Commissioner who also imposed penalty of Rs.98240/-. The assessee filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) held that the assessee was not required to reverse the credit involved on stocks lying in the factory when the appellant opted to avail the SSI benefit and opted out of the CENVAT Credit Scheme. Thereafter, the revenue filed an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit, the balance, if any, still remains shall lapse and shall not be allowed to be utilized for payment of duty on excisable goods, whether cleared for home consumption or for export." After considering the Rule 57, the Apex Court held as follows:- "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 acknowledgement 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 exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Versus Premier Tyres Ltd. 2001 (130) ELT 417 following the judgment of the Apex Court answered a similar question in favour of the assessee and against the Department. It would also be pertinent to mention that the judgment of the Tribunal in Ashok Iron and Steel Fabricators' case has been upheld by the High Court of Rajasthan in Hindustan Zinc Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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