2017 (11) TMI 822 - AT - Central Excise

CENVAT credit - Rule 16 of Central Excise Rules 2004 - Held that - there is no dispute as to the fact that appellant had cleared their final products for the first time on discharge of appropriate duty; the purchasers of the said of the final products returned the same back to the appellant under cover of duty paying documents from their end which indicated discharge of duty liability; on receipt of said returned finished goods, appellant availed Cenvat Credit under Rule 16 of CER, 2002, and after remaking/re-fining/recondition t said final product were entered in RG-1 register, and cleared for home consumption of payment of appropriate duty - On perusal of the records, it is noticed that from page 74-103. appellant has annexed copies extracts of register maintained by them in respect of the finished goods received back and action taken on the same and subsequent clearance on payment of appropriate CES TAT Excise duty. The perusal of the said copies indicates clearly the quantum of receipt of finished goods and quantum of dispatched goods after recondition/refining. There is no dispute as to fact that the appellant had cleared the finished goods for home consumption on payment of appropriate duty as also receipt of the finished goods from appellant s purchasers - the provision of rules 16 of the CCR, 2002 have been fully complied with by appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of ineligible Cenvat Credit on returned finished goods.
2. Dispute regarding proper maintenance of records by the appellant.
3. Interpretation and application of Rule 16 of Central Excise Rules 2004.

Analysis:
1. The appellant availed ineligible Cenvat Credit on finished goods returned by purchasers. The audit party noticed this during the period 2006-2007 to 2010-2011. A Show Cause Notice was issued for demand of duty along with interest and penalties. The appellant defended the notice on merits and limitations. The adjudicating authority confirmed the demand and penalties. The first appellate authority directed the appellant to deposit 50% of the dues for appeal hearing, which if not complied with, resulted in appeal dismissal. The Tribunal directed the appellant to pay 50% of the demanded duty and report compliance. The first appellate authority upheld the original order, leading to the appellant's appeal to the Tribunal.

2. The dispute centered around the proper maintenance of records by the appellant regarding the receipt and dispatch of finished goods. Despite detailed records provided by the appellant, both lower authorities concluded inadequacy in record-keeping. The appellant had cleared finished goods for home consumption after receiving them back from purchasers with duty payment. The records maintained by the appellant clearly showed the receipt, dispatch, and processing of finished goods, accounting for any scrap generated during the process.

3. Rule 16 of the Central Excise Rules 2004 was crucial in this case. The rule allows an assessee to receive back finished goods on which duty was paid, avail Cenvat Credit, and clear remade goods after payment of appropriate duty. The appellant complied with Rule 16 by maintaining records of receipt, processing, and dispatch of finished goods. Despite the detailed records demonstrating compliance with the rule, the lower authorities failed to acknowledge the appellant's adherence to the provisions.

In conclusion, the Tribunal found that the appellant had complied with Rule 16 of the CENVAT Credit Rules 2002. Therefore, the impugned order was deemed unsustainable and set aside. The appeal was allowed, highlighting the importance of proper record-keeping and adherence to relevant rules and regulations in excise matters.