ALBERT DAVID LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE issue involved in this Appeal, filed by M/s. Albert David Ltd., is whether the Cenvat credit is to be reversed if subsequent to the availment of credit, the finished product becomes exempted wholly from payment of duty.

(2.) BRIEFLY stated the facts are that the Appellants manufacture P and P medicines and avail of Cenvat credit of the duty paid on inputs under Rule 57AA of the Central Excise Rules, 1944; that intravenous fluids was exempted from payment of duty under Notification No. 6/2000 -C.E., dated 1 -3 -2000 as amended by Notification No. 36/2000 -C.E., dated 4 -5 -2000; that the Deputy Commissioner, under Order -in -Original No. 35/2001, dated 29 -5 -2001 confirmed the demand of an amount of Rs. 38,22,164/ - and imposed a penalty of Rs. 3 lakh holding that as per provisions of Rule 57AB of the Central Excise Rules, Cenvat credit is not available in respect of inputs which are used in or in relation to the manufacture of exemption goods and I.V. fluids is exempted with effect from 4 -5 -2000; that the Commissioner (Appeals) also under the impugned Order rejected their Appeal holding that Rule 57AD provides that Cenvat credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods.

(3.) SHRI D. Chitlangia, General Manager of the Appellants, submitted that the credit was validly taken when I.V. fluids were not exempted products; that the exemption came later on and therefore, the credit was taken validly and in a legal manner; that upon a co -joint reading of Rules, 57AB(1), 57AC(1) and 57AD (1), it becomes very clear that while no credit can be taken in respect of inputs received on or after the date of exemption of the final products, credit which has already been taken legitimately, prior to the date of exemption is not liable to be reversed; that none of the Rules provide for reversal of Cenvat credit availed legally when finished goods were dutiable but later on exempted from excise duty. He relied upon the decision of the Supreme Court in the case of CCE, Pune v. Dai Ichi Karkaria Ltd,1999 (112) E.L.T. 353 (S.C.) wherein the Supreme Court has held as under :