2017 (7) TMI 1122 - AT - Central Excise

CENVAT credit - Rule 16 of CER - the goods were received after rejection from the customers and returned to the factory at Sahibabad - Held that - there is no basis for the allegations of the revenue that the goods or finished goods cleared by the appellant have not been received back, even except assumption and/or presumptions - appellant is entitled to Cenvat credit under Rule 16(1) of Central Excise Rules, 2002 - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Disallowance of Cenvat credit for returned goods under Rule 16 of Central Excise Rules, 2002
- Imposition of penalty under Rule 15 of Cenvat Credit Rules read with Section 11 AC of the Act
- Adjudication of show cause notices and appeals against the orders

Detailed Analysis:
1. The appellant, a manufacturer of PVC Pipes, PVC Pipes fittings, and water tanks, faced a show cause notice for taking Cenvat credit in respect of returned goods under Rule 16 of the Central Excise Rules, 2002. The revenue alleged that the goods received were waste material not recyclable for manufacturing. The appellant contended that the goods were returned after rejection from customers and were eligible for Cenvat credit as per Rule 16 provisions.

2. Two show cause notices were issued proposing disallowance of Cenvat credit amounts along with interest and penalties under Rule 14 and Rule 15 of Cenvat Credit Rules, 2004. The orders-in-original confirmed the demands and imposed penalties on the appellant. The Commissioner (Appeals) dropped the personal penalty but confirmed the demand and penalty on the company, leading to the appeal before the Tribunal.

3. The appellant argued that a similar issue was decided in their favor by the Tribunal in a previous case, where it was held that Cenvat credit on duty paid defective goods returned to the factory for processing under Rule 16(1) was eligible. The Tribunal, after considering the contentions of both parties, concluded that the appellant was entitled to Cenvat credit under Rule 16(1) and set aside the impugned order, allowing the appeal and granting consequential benefits to the appellant.

4. In a related appeal by the Revenue against a similar order-in-appeal, the Tribunal dismissed the appeal in light of the findings favoring the appellant in the main appeal. Consequently, the main appeal filed by the appellant was allowed, and the appeal by the Revenue was dismissed, granting relief to the appellant and upholding their entitlement to Cenvat credit under Rule 16(1) of the Central Excise Rules, 2002.

5. The Tribunal's decision highlighted the importance of maintaining proper records and compliance with Rule 16 provisions for claiming Cenvat credit on returned goods. The judgment emphasized the need for clear identification and documentation of returned goods to support the eligibility for Cenvat credit, ultimately leading to the allowance of the appeal filed by the appellant and the dismissal of the Revenue's appeal.