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2016 (1) TMI 157 - AT - Central ExciseCenvat Credit - return of rejected articles of rubber back from their customer - removal of such goods as scrap later - scope of Rule 16 of CE Rules 2002 - Held that - assessee had tried to reprocess the finished goods received and in few cases no duty was paid. The finished goods received back resulted in scrap. The assessee has discharged the duty liability on scrap on the value of the invoices raised by them. In our considered view this is a correct position of the law and if any inputs are issued to the job-worker for manufacturing and manufacturing activity undertaken on such inputs the resultant product cleared as scrap and no input as such - Demand set aside - Decided in favor of assessee. As regards the demand of duty on the value of moulds used by the respondent in manufacturing the final products to their customers - Held that - when the Central Excise duty is paid on moulds at one time or recovered by amortising the cost of goods produces it is the same i.e. duty on value of mould is to be recovered which in this case has already discharged by the assessee - No demand can be made - Decided in favor of assessee.
Issues:
1. CENVAT Credit reversal on returned goods not processed fully. 2. Duty payment on scrap value without reversing CENVAT Credit. 3. Non-inclusion of value of moulds in duty calculation. 4. Applicability of Rule 16 of Central Excise Rules. 5. Correctness of first appellate authority's decision. Analysis: 1. The first issue revolves around the CENVAT Credit availed on returned goods not fully processed. The appellant argued that Rule 16(2) mandates the reversal of CENVAT Credit if no manufacturing activity is undertaken on returned goods. However, the respondent cleared scrap after trying to reprocess the goods, resulting in self-destruction. The Tribunal found that the appellant discharged duty liability on the scrap value, aligning with the law's requirements. The Tribunal upheld the first appellate authority's decision, setting aside the demands raised on this issue. 2. The second issue concerns duty payment on scrap value without reversing CENVAT Credit. The Tribunal noted that the appellant had tried to reprocess the returned goods but ended up with scrap in some cases. The duty was paid on the scrap value, and the Tribunal deemed this action as compliant with the law. The Tribunal upheld the first appellate authority's decision, rejecting the demands raised by the adjudicating authority. 3. The third issue involves the non-inclusion of the value of moulds in duty calculation. The appellant contended that they had discharged Central Excise duty on the cost of moulds recovered from customers, either at one time or through amortization. The Tribunal found that the duty on the value of moulds had been paid by the appellant as required by law. The Tribunal upheld the correctness of the appellant's duty calculation methodology. 4. The fourth issue focuses on the applicability of Rule 16 of Central Excise Rules. The Tribunal analyzed the provisions of Rule 16, emphasizing that the rule allows the assessee to reprocess finished goods received back and clear them on payment of duty. The Tribunal determined that the appellant's actions aligned with the law, as they discharged duty liability on the scrap value and moulds as required. The Tribunal upheld the first appellate authority's decision in this regard. 5. The final issue pertains to the correctness of the first appellate authority's decision. The Tribunal reviewed the contentions made by both sides and examined the records. It concluded that the impugned order was legally sound and free from any defects. The Tribunal upheld the first appellate authority's decision, affirming the correctness and legality of the order. In conclusion, the Tribunal upheld the impugned order, rejecting the appeal and confirming the decisions made by the first appellate authority.
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