Customs, Excise and Gold Tribunal - Delhi
Cce vs Saboo Alloys Pvt. Ltd. on 10 January, 2008
ORDER P.K. Das, Member (J)
1. The issue involved in this case is as to whether the credit is required to be reversed in respect of inputs contained in the finished goods lying in stock on the date of the respondents opting for exemption.
2. The learned DR on behalf of the revenue submits that the Commissioner (Appeals) allowed the appeal following the decision of larger Bench of the Tribunal in the case of CCE Rajkot v. Ashok Iron & Steel Fabricators . He submits that the Division Bench of the Tribunal in the case of Tractors & Farm Equipments Ltd v. CCE Madurai reported in 2007(79) RLT 384 (CESTAT-Che) after considering the larger Bench decision held that input credit taken in respect of inputs in stock or contained in final product, on the date of opting for exemption, all credit is to be reversed.
3. The learned Advocate submits that Sub-rule (3) of Rule 11 of Cenvat Credit Rules, 2004 which was inserted by Notification No. 10/2007 dated 1.3.2007 provides a manufacturer or producer of the final product shall be required to pay an amount equivalent to the cenvat credit, if any, taken by him in respect of inputs during the manufacture of the said final product and is lying in stock or in process or as contained in final product lying in stock, if he opts for exemption from whole of duty of excise leviable thereon. He submits that prior to innertion of Rule (3) of Rule 11 of the said Rule demand is not sustainable. He also submits that larger Bench of the Tribunal in the case of Ashok Iron & Steel Fabricators has decided the issue in favour of the asessee which has been upheld by the Hon'ble Supreme Court as reported in 2003 (156) ELT A-212. He also submits that the Tribunal in a series of decisions held in favour of the assessee following the Larger Bench decision:
a) PSL Limited v. CCE Visakhapatnam
b) Tafe Limited (Tractor Division) v. CCE Bangalore 2007 (79) RLT 706 (CESTAT-Bom)
c) Swastik Textile Engineers Pvt. Ltd. v. CCE Ahmedabad 2007 (214) ELT 198 (Tri-Ahmd)
d) Bhoorathram & Co v. CCE Jaipur
4. After hearing both the sides and on perusal of the record, I find that the provision for reversal of credit on inputs used in the manufacture of final product as lying in stock or process or a final product lying in stock, if the manufacturer opts for exemption, was inserted by Sub-rule (3) of Rule 11 of Cenvat Credit Rules, 2004 by Notification No. 10/2007-CE(NT) dated 1.3.2007. The learned DR submits that the issue has already been decided by the Division Bench of the Tribunal in the case of Tractors & Farm Equipments Ltd (supra) in favour of Revenue. He submits that Sub-rule (3) of Rule 11 of the said Rules is inserted to put on rest on the controversy and therefore, the respondent is required to reverse credit as held by the Tribunal in the case of Tractors & Farm Equipments Ltd (supra).
5. I find that the larger Bench of Five Members of the Tribunal in the case of Ashok Iron & Steel Fabricators (supra) held that credit is not required to be reversed when subsequently final product exempted from duty, credit having been taken and benefit available to the manufacturer without any limitation of time. It is seen that the Tribunal in a series of decisions following the decision of the larger bench of the Tribunal held in favour of the assessee. I find force in the submission of learned Advocate that after insertion of Sub-rule (3) of Rule 11 of Cenvat Credit Rules, 2002, the assessee is required to pay the amount equivalent to the cenvat credit on the inputs used in the manufacture of final product, if he opts for exemption. It is seen that the decision of the Tribunal in the case of Tractor & Farm Equipment (supra) is prior to insertion of Sub-rule (3) of Rule 11 of Rules. In view of the above, I do not find any reason to interfere with the order of the Commissioner (appeals). Accordingly, the appeal filed by the revenue is rejected.
(Order dictated and pronounced in the open Court).