2009 (3) TMI 681 - AT - Central Excise

Summary

Issues:
1. Admissibility of CENVAT credit on unused inputs cleared as scrap.
2. Requirement of permission for re-credit of duty paid on inputs.

Issue 1: Admissibility of CENVAT credit on unused inputs cleared as scrap:
The appeal concerns the department challenging an order approving re-credit of Rs. 3,09,128/- taken by the assessee for certain inputs cleared as scrap. The Revenue argues that since the inputs were not used in manufacturing finished goods, CENVAT credit was inadmissible. The case revolves around whether the unused inputs, cleared as scrap, qualify as being removed "as such" under Rule 3(4) of the CENVAT Credit Rules. The Revenue relies on a circular for recovery of irregularly taken CENVAT credit and a tribunal decision, while the lower appellate authority rejects the applicability of the tribunal's decision.

Issue 2: Requirement of permission for re-credit of duty paid on inputs:
The error identified is that the lower appellate authority overlooked that the department did not challenge the original authority's finding that no permission was needed for re-credit of duty paid on inputs initially taken and later reversed. The appellant argues against the provision for suo motu re-credit or refund of duty originally taken and reversed. Reference is made to a tribunal's Larger Bench decision contradicting the original authority's finding. The lower appellate authority correctly notes that a specific circular is not applicable to the case as it pertains to inputs cleared on payment of duty, unlike those fully or partially written off. The appellate authority missed considering the unchallenged finding of the original authority, leading to the judgment allowing the appeal for re-examination by the lower appellate authority.

In conclusion, the judgment sets aside the impugned order, allowing the appeal by way of remand for further examination in line with the law and principles of natural justice.