ORDER
S. Kalyanam, Member
1. This appeal is filed by the Department and is directed against the order of the Collector of Central Excise (Appeals), Madras, dated 21.2.1989.
2. Shri Jayaseelan, the learned DR, contended that the respondents were engaged in the manufacture of aerated waters and were availing credit of duty on the specified inputs for payment of duty on aerated waters in terms of Notification 177/86 dated 1.3.1986. Consequent on the deletion of aerated waters from the MODVAT Scheme effective from 1.10.1987, the respondents who had availed MODVAT credit on the inputs lying in stock with them prior to 1.10.1987 should redeposit the amount and, therefore, by reversing the impugned order of the Collector (Appeals) the respondents should be called upon to pay the duty as demanded.
3. Shri Prabhakara Shastri, the learned Counsel for the respondents, submitted that the issue is already covered by a number of rulings of this Bench and in particular placed reliance on the decision in the case of Collector of Central Excise v. Sri Sarvaraya Sugar (Bottling Unit) Ltd. .
4. We have considered the submissions made before us. We note that this Bench in respect of the identical issue in the aforesaid ruling has observed as under:
6. We observe that MODVAT credit facilities were introduced with a view to reduce the cascading effect of duty in case of certain specified finished products. Conditions precedent for taking input credit are that both inputs and the finished products at the time inputs are received should be specified in the Notification issued under Rule 57A and the assessee should have filed declaration for taking the input credit. It is not in dispute that when the Respondents received the inputs both the conditions were satisfied. However, what transpired in this case is that after input credit had been taken after satisfying the conditions as set out under Rule 57A and 57G, the facility for MODVAT in respect of aerated waters was withdrawn by deleting aerated water falling under sub-headings 2201.12 and 2201.11 from the list of specified goods earlier mentioned in Notification No. 177/88 dated 1.3.1988. Some of the inputs were lying in stock at the time when the facility was withdrawn. This credit in respect of the same had been already taken. The Revenue wants to reverse the credit attributable to this input. We observe that under Rule 57G at the relevant lime, if the conditions set out were satisfied the limit of taking credit acquires a finality under law and if the credit has been utilised as provided under law, as set out under Rule 57F, no fault can be found in respect of the utilisation of the credit, It is not the case of the Department that the manner of utilisation of the credit was otherwise than set out under Rule 57F. There is no specific provision under MODVAT Rules providing for recovery of MODVAT credit whereby if in respect of any particular commodity credit allowed is utilised under Rule 57F and facility of MODVAT is withdrawn and the inputs received earlier to the date of withdrawal of the MODVAT facility are still lying unutilised. There is no one-to-one correlation also provided for in respect of the inputs used and the finished product manufactured out of the same for the purpose of utilisation of MODVAT credit. It is not the case of the Revenue that input credit taken was not utilised for the specified finished product at the relevant time. In view of the above we hoi’ that the credit has been correctly taken and utilised by the Respondents as held the learned lower appellate authority and therefore, the Respondents cannot be caded upon to reverse the same. The appeal of the Revenue is therefore dismissed.
Following the above ratio, we uphold the impugned order and dismiss the appeal.
(Pronounced in open court)