COMMISSIONER, CENTRAL EXCISE Vs. UNITED VANASPATI LTD.

JUDGEMENT

(1.) THIS appeal was admitted on the following substantial question of law:

(2.) THE short question which arises for decision is whether a manufacturer who has obtained credit of the Central Value Added Tax paid by him in respect of the raw material and inputs lying in stock or in process or contained in the final product lying in stock is required to refund/repay the credit when the final product is exempted from excise. The main argument of Sh. Sandeep Sharma, learned Assistant Solicitor General of India is that the authorities below have not taken into consideration Rule 9(2) of the Cenvat Rules.

(3.) THE undisputed facts of the case are that the assessee is engaged in the manufacture of vegetable products and was taking credit of the duties paid on the inputs used in the manufacture of final products. The final product was exempted from payment of duty vide notification No. -CE dated 23.7.96. Therefore, the notice was issued requiring the assessee to reverse the credit of Rs. 93,584/ -. The assessee contested this notice on the ground that once the credit has been taken, the same cannot be dis -allowed since in the books it had already been used and there was no legal provision which provided for recovery of such credit. It was further contended that Rule 57C places a bar on taking credit of inputs used for the manufacture of final product 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 Rs. 93,584/ -.