2017 (10) TMI 647 - AT - Central Excise

CENVAT credit - Rule 16 of the Central excise Rules - denial of credit on the ground that the goods brought back to the Nagpur factory was not originally manufactured by the said factory and also on the ground that the documents on which the credit is sought to be availed is not addressed to the Nagpur factory but to their office at Thane - Held that - CBEC in its Circular dated 13/12/2001 has clarified that Receipt of duty paid goods in the factory of manufacturer for the purpose specified in said rule may be allowed even in respect of goods not manufactured by them subject to adherence of other conditions prescribed therein - rejection cannot sustain - credit allowed. Further, the receipt of goods at Nagpur factory has not been challenged by the Revenue - the objection regarding endorsement of documents and address of Thane office in the documents becomes a procedural lapse. Substantive benefit cannot be denied for procedural reasons - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat Credit under Rule 16 of the Central Excise Rules based on goods brought back to a different factory and documents addressed to a different office.

Analysis:
The appellant, M/s. Uni Deritend Ltd., filed an appeal against the denial of Cenvat Credit under Rule 16 of the Central Excise Rules. The appellant had multiple factories and an office, with goods cleared by various factories brought back for remaking at a different factory. The Revenue denied the credit citing that the goods were not originally manufactured by the receiving factory and that the documents were addressed to a different office. The appellant argued that CBEC Circular clarified that goods from any manufacturer by any factory could be brought back for the purpose stated in Rule 16. Additionally, the appellant presented documents showing the endorsement of goods in favor of the receiving factory. The Assistant Commissioner relied on an impugned order and a Trade Notice. The Tribunal noted the CBEC Circular, which allowed the receipt of duty-paid goods in the factory of the manufacturer for specified purposes, even if not manufactured by them. The Tribunal found the first objection of the Revenue unsustainable based on this clarification.

Regarding the second objection, the Tribunal observed that the receipt of goods at the receiving factory was not disputed by the Revenue. Therefore, any discrepancy in the endorsement of documents and the address mentioned was considered a procedural lapse, not substantial enough to deny the Cenvat Credit claim. The Tribunal emphasized that substantive benefits should not be denied for procedural reasons. Consequently, the appeal was allowed, overturning the denial of Cenvat Credit under Rule 16 of the Central Excise Rules. The judgment was pronounced in court on 19/9/17.