2017 (4) TMI 326 - AT - Central Excise

Demand raised by invoking extended period of limitation - It is the case of the Revenue that the appellant undertook certain process, which do not amount to manufacture - Held that - in terms of Rule 16(1) where the duty paid goods are brought back to any factory for being remade, reconditioned, etc., the assessee shall state the particulars of such receipt in his records and shall be entitled to take Cenvat credit of the duty paid on such goods - the appellants have complied with the said condition. Thereafter, at the time of clearance also, they have cleared the same under proper invoice and on payment of duty. In such situation, to sustain a case for extended period, no element of suppression, fraud, etc., can be established. As such, without going into the merits of the case, the demand is not sustainable on the question of time-bar itself - appeal allowed - decided in favor of appellant.

Summary

Issues: Time-barred demand based on differential duty paid on returned goods processed by the appellant.

Analysis:
The appeal challenged an order dated 20-5-2013 of Commissioner (Appeals-I), Jaipur, regarding the appellant, engaged in manufacturing ACSR Conductors liable to Central Excise duty. The dispute centered around the appellant's process on returned defective goods and whether it constituted "manufacture" under Rule 16 of Central Excise Rules, 2002. The Revenue argued that the process undertaken did not amount to manufacture, leading to a demand for a differential duty of ?1,44,158 due to underpayment at clearance. A show cause notice dated 14-12-2010 initiated the demand, which was confirmed by the Original Authority and the Commissioner (Appeals). The appeal was heard, focusing on the time-bar issue raised by the appellants.

The appellants contested the demand primarily on the grounds of time-bar. The credit for the returned items was availed in November 2008, while the goods were processed and cleared in December 2008. The show cause notice invoked an extended period of demand, alleging duty difference between credit taken and duty paid. However, it was noted that the appellants had duly recorded the credit availed at return and clearance in their records, complying with Rule 16(1) requirements. The appellants had also cleared the goods under proper invoices and paid duty at clearance. The absence of suppression or fraud led to the conclusion that the demand was not sustainable on the time-bar issue alone. The order was set aside, and the appeal was allowed on 28-10-2016, without delving into the merits of the case.

In conclusion, the judgment revolved around the time-barred demand for a differential duty on goods processed by the appellant, focusing on whether the process amounted to "manufacture" under Rule 16. The decision highlighted the importance of compliance with record-keeping and procedural requirements, ultimately leading to the setting aside of the demand based on the absence of suppression or fraud, without a detailed examination of the manufacturing process itself.