Judgment:
1. In this appeal which has been filed by the appellants against the order-in-appeal, the issue relates to the denial of the Modvat credit to them availed and utilised, in respect of the inputs used in the manufacture of the finished goods before the issuance of the Notification No. 16/96-CE dt. 23.7.96 exempting the goods i.e.
vegetable products from payment of duty. This issue already stands settled in favour of the appellants by the Larger Bench decision of the Tribunal in the case of CCE, Rajkot v. Ashok Iron & Steel Fabricators reported in 2002 48 RLT 789 wherein it has been observed that when the credit has been taken and utilised by the assessee before the final product becomes exempt from duty, the same cannot be ordered to be reversed. Therefore, the impugned order cannot be sustained. The law laid down in the case of Raghuvar (India) Ltd. v.. CCE reported in 2002 140 ELT 280 refered by Ld. JDR, is not of any help to the revenue. In that case also it has been observed that when credit has been taken and utilised at a time when final product was dutiable, subsequent exemption from duty, would not be a ground for reversal of credit.
However, when the credit had not been utilised and before that the final product had become non-dutiable, in such a situation, the assessee would be liable to reverse the credit. But such is not the position in the case in hand.
2. In view of the discussions made above, the impugned order is set aside and the appeal of the appellants is allowed with consequential relief as per law.