JUDGMENT 1. This appeal is by the revenue challenging the order passed by the Tribunal which held that CENVAT credit is indefeasible and, therefore, the demand for reversal of MODVAT credit legally taken is not correct and, accordingly, set aside the order passed by the adjudicating authority. 2. The Respondent, M/s. TAFE Limited are manufacturers of tractors and parts thereof. They are availing CENVAT credit under CENVAT Credit Rules, 2002. In terms of Notification No. 23/2004-CE, dated 1-3-2002, tractors have been exempted from payment of duty with effect from 9-7-2004. As on 8-7-2004, the Assessee had a closing stock of finished goods, i.e., 319 tractors, which were manufactured using the inputs in which credit was availed and also a closing stock of inputs as such on which credit was availed. The CENVAT credit involved in the said 319 tractors was Rs. 90,77,881 and credit availed on inputs as such in stock was Rs. 1,19,06,475. As per Rule 6(1) of the CENVAT Credit Rules, 2002, the CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods. Therefore, a show-cause notice dated 8-12-2004 was served on the Assessee demanding recovery of Rs. 2,09,84,356, i.e., Rs. 90,77,881 being the CENVAT credit availed in respect of the inputs used in the manufacture of 319 tractors in stock as on 8-7-2004 and Rs. 1,19,06,475 being the CENVAT credit availed in respect of inputs as such in stock as on 8-7-2004 under Rule 12 of the CENVAT Credit Rules, 2002 read with Section 11A of the Central Excise Act, 1944 with interest and penalty. 3. The Assessee objected to the said demand. However, overruling the said objection, the adjudicating authority passed an order confirming the recovery of Rs. 2,09,84,356. Aggrieved by the same, the Assessee preferred an appeal to the Tribunal. The Tribunal relying on the judgment of the Apex Court in Collector of Central Excise, Pune Etc. Etc. Vs. Dai Ichi Karkaria Ltd. Etc. Etc., AIR 1999 SC 3234 allowed the appeal and held that CENVAT credit need not be reversed if subsequently the final product is exempted from duty and when the credit has been taken legally. Aggrieved by the said order, the revenue is in appeal. 4. Etc. Vs. Dai Ichi Karkaria Ltd. Etc. Etc., AIR 1999 SC 3234 allowed the appeal and held that CENVAT credit need not be reversed if subsequently the final product is exempted from duty and when the credit has been taken legally. Aggrieved by the said order, the revenue is in appeal. 4. This Court while admitting the appeal on 17-9-2007 formulated the following substantial question of law: Whether the Tribunal has erred in law by not appreciating the language of the relevant Rule 3 of CENVAT Credit Rules, 2002 which clearly state that' CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods'? 5. The learned Counsel for the revenue contended that tractors were exempted from payment of duty. The CENVAT credit availed of by the Assessee which forms part of the finished product namely tractor as well as the inputs in the factory cannot be claimed by the Assessee and they were bound to reverse the same. As they did not comply with the demand made therein, the adjudicating authority was justified in making the demand plus interest plus penalty. The Tribunal has erroneously interfered with the said order. 6. Dealing with CENVAT credit and reversal of said credit, the Apex Court in the case of Dai Ichi Karkaria Ltd. (supra) at paragraphs 17 and 18 interpreting Rules 57A and 57J of the Central Excise Rules, 1944, has held as under: 17. It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without an limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without an limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. 18. It is therefore, that in the case of Eicher Motors Limited and Another Vs. Union of India and Others, AIR 1999 SC 892 this Court said that a credit under the MODVAT scheme was as good as tax paid'. 7. There is no provision in the MODVAT rules which provides for a reversal of the credit by the Excise authorities where it has been illegally and irregularly taken, in which event it stands cancelled or if utilised, has to be paid for. 8. The Punjab and Haryana High Court in the case of CCE vs. HMT (TD) Ltd. [C.E. Appeal No. 78 of 2009, dated 5-4-2010] at paragraph 17 have held as under: Similarly, the Principal/Larger Bench of the Tribunal after considering the various judgments mentioned in case of H.M.T. (TD) Ltd. case (supra) (between the parties) has held that when the input-credit legally taken and utilised on the dutiable final products, need not be reversed on the final product becoming exempt subsequently. The observations of the aforesaid judgments "mutatis mutandis" are applicable to the present controversy. 9. Therefore, it is clear from the aforesaid judgment of the Apex Court that once the input credit is legally taken and utilized on the dutiable final product, it need not be reversed on the final product being exempted subsequently. Only if any products are purchased subsequent to the said exemption and if any tax is paid on such inputs, as the final product is exempted from payment of tax, the Assessee would not be entitled to avail the CENVAT credit on such inputs. Only if any products are purchased subsequent to the said exemption and if any tax is paid on such inputs, as the final product is exempted from payment of tax, the Assessee would not be entitled to avail the CENVAT credit on such inputs. But the CENVAT credit availed on such inputs till the date of exemption, they vest in the Assessee and the Assessee cannot be divested of that credit as the law does not provide for the same. Therefore, the authorities taking advantage of the Notification exempting the final product cannot claim reversal of CENVAT credit either in respect of final product which have come into existence on the date of the Notification or on the inputs stored in the godown or the work-in-progress and finished products. 10. Therefore, the Tribunal was justified in interfering with the order passed by the adjudicating authority which was illegal and contrary to law. Accordingly, the substantial question of law raised in this appeal is answered in favour of the Assessee and against the revenue.