Per G.R. Sharma: The captioned appeals are directed against the order of Collector (Appeals). The Collector (Appeals), in his order, had held:

"I have carefully considered the submissions made by the appellant in the appeal memorandum and also during the course of personal hearing. In these cases. Modvat credit facility on aerated water was withdrawn on 1.10.87 vide Notfn. No. 203/87 and the appellants had some slock of inputs lying with them on 30.9.87 which they had already availed modvat facility. Therefore, the issue for decision before me is whether the credit once taken can be reversed in the event of a particular input being deleted from the specified categories of the inputs. On close reading of Rules 56A, it is quite clear that there is nothing in Rule 56A or under the modvat rules which authorises Revenue to demand back the credit amounting in a case of the nature under reference. When credit has been utilised for payment of duty without any irregularity it cannot be taken back by the deplt. Allowing credit and utilising it are two different stages. Since the credit is to be allowed as soon as the goods are brought into the factory, the grant of credit has not to wait till the finished goods have actually be manufactured. Allowing of credit therefore, will have to be with reference to the facts as prevailing at the time the inputs are taken to the factory. If there was no error or the irregularity in the allowing of credit at the point of time, there is no justification whatsoever in disallowing the credit. The case is also covered by the judgment of CEGAT reported in 1991 (34) ECR 324 (CEGAT SRB) wherein it has been held that once credit has been taken and there is no dispute about its use in the specified product, credit cannot be reversed over if the input is deleted from the specified category. In view of the above, I accept both the appeals with consequential relief to the appellant and dispose of the same accordingly."

2. As the two appeals arise out of the same order-in-appeal, therefore, they are being disposed of by this common order.

3. The facts of the case in brief, are that the respondents are engaged in the manufacture of aerated water. The respondents herein took credit of duty on inputs under the modvat scheme and utilised the credit so taken for payment of duty on the finished aerated water. Modvat facility on the inputs was available only upto 30th Sept. 1987 and was withdrawn from 1.10.87 under Notification No. 203/87. Some inputs were received by the respondents herein before 30th Sept. 1987 but remained unutilised on 30th Sept. 1987. The lower authorities alleged that the respondents herein were entitled to utilise the credit of duty on the inputs consumed in the manufacture of aerated water upto 30th Sept. 1987. Accordingly, a show cause notice was issued asking the respondents herein to explain as to why the duty should not be demanded on unutilised inputs remaining on the date of withdrawal of modvat facility on the inputs. Accordingly, the Asstt. Collector adjudicated the case and demanded duty on the ground that since the inputs received upto 30th Sept. 1987 remained unconsumed in the manufacture of finished product, these were not entitled to benefit of modvat facility.

4. Shri P. Das. the learned SDR appearing for the appellant submitted that the provisions of modvat rules and Notification No. 177/86 dated 1.3.86 as amended cannot be read in isolation; that the facility of taking credit under modvat scheme is available only if the inputs and the final products are specified in the said notification. The learned SDR submitted that in the instant case, the final products were not specified products w.e.f. 1.10.87; that the credit taken on inputs which remained unutil ised in the manufacture of final products upto 30th Sept. 1987 was erroneous and the Asstt. Collector was right in demanding the duty under Rule 57I. He submitted that for availing modvat credit it was essential that inputs and