2011 (4) TMI 1330 - AT - Central Excise

CENVAT credit - rejected goods received back from their customers and cleared as such - Rule 16(2) of the Central Excise Rules, 2002

Summary

Issues:
1. Confirmation of duty demands, interest, and penalty on assesses for wrongly availing credit on rejected goods without manufacturing process under Rule 16(2) of Central Excise Rules, 2002.

Analysis:
The judgment by the Appellate Tribunal CESTAT Chennai addressed the issue of duty demands, interest, and penalty imposed on assesses for availing credit on rejected goods without undergoing any manufacturing process. The Tribunal examined Rule 16(2) of the Central Excise Rules, 2002, which mandates payment of duty if the goods are not subjected to a manufacturing process before removal. The Tribunal referred to the decision in Apollo Tyres Limited vs Commissioner of Central Excise, Pune-III, highlighting that when goods are not processed, duty is payable under the second part of Rule 16(2). Distinctions were drawn from other cases cited by the Respondent, indicating that those cases involved rejected goods undergoing some form of processing, unlike the current scenario.

The Tribunal, following the precedent set by the Apollo Tyres case, concluded that the assesses in the present case were liable for duty under Rule 16(2) as they did not subject the returned goods to any manufacturing process. Consequently, the impugned orders confirming duty demands, interest, and penalty were set aside, and the appeals were allowed. The judgment emphasized the applicability of the Apollo Tyres decision to the factual circumstances of the case, leading to the favorable outcome for the assesses. The decision was dictated and pronounced in open court, providing clarity on the interpretation and application of Rule 16(2) in similar cases involving the availing of credit on rejected goods without undergoing manufacturing processes.