2009 (3) TMI 337 - AT - Central Excise

Return of goods - They availed the credit of duty originally paid at the time of clearance of the goods under their own invoices - an assessee availed the cenvat credit on duty paid on such goods as if such goods have been received by them as inputs. - However such benefits stands denied to them on the sole ground that the appellant s own invoices cannot be considered as duty paying documents in terms of Rule 7 of the Cenvat Credit Rules. - there is no dispute that provisions of Rule 16 allow the assessee to avail the credit of duty paid on the goods cleared by them as if such goods are received as inputs under the Cenvat Credit Rules 2002. This is in the nature of deemed provisions where the final products returned by the buyer is deemed to be input by the assessee. The provisions of Rule 7 which specify the documents for the purposes of availment of credit in respect of inputs would not apply to the provisions of Rule 16. This is the special provisions enacted for receiving back the final product - The invoices originally issued by the manufacturer are also required to be considered as fit for availment of credit. Assessee s appeal is allowed

Summary

Issues:
1. Availment of cenvat credit on duty paid on goods returned by customers.
2. Interpretation of Rule 16 of the Central Excise Rules, 2002.
3. Consideration of manufacturer's own invoices as duty paying documents under Rule 7 of the Cenvat Credit Rules.

Analysis:
1. The judgment addresses the issue of whether the appellants can avail cenvat credit on duty paid on goods returned by customers. The authorities contended that the appellant's own invoices cannot be considered as duty paying documents under Rule 7 of the Cenvat Credit Rules. However, Rule 16 of the Central Excise Rules, 2002 allows the assessee to avail credit on duty paid on returned goods as if they are received as inputs. The Tribunal cited the case of BAPL Industries Ltd. and a Board Circular clarifying that Rule 16 enables manufacturers to avail cenvat credit equivalent to the duty paid. The Tribunal found that the appellants are entitled to the credit as the goods were returned, and ruled in favor of the appellants.

2. The judgment delves into the interpretation of Rule 16 of the Central Excise Rules, 2002. It highlights that Rule 16 allows the assessee to treat final products returned by buyers as inputs, enabling them to avail cenvat credit on duty paid on such goods. The Tribunal emphasized that the provisions of Rule 7, which specify documents for credit availment on inputs, do not apply to Rule 16. The special provisions of Rule 16 deem returned final products as inputs, necessitating the consideration of manufacturer's own invoices for credit availment. The judgment clarifies that Rule 16 provides a mechanism for manufacturers to claim cenvat credit on goods returned by buyers.

3. The judgment also addresses the issue of whether the manufacturer's own invoices can be considered as duty paying documents under Rule 7 of the Cenvat Credit Rules. The appellants argued that their buyers, who are SSI units, are not registered with Central Excise authorities, making it impossible to return goods under Central Excise invoices. The Tribunal, however, emphasized that Rule 16 allows for the deemed status of returned final products as inputs, enabling the manufacturer's invoices to be considered for credit availment. The judgment underscores that the law, as declared in previous cases and supported by a Board Circular, allows manufacturers to avail cenvat credit equivalent to the duty paid by them, even if the goods are returned under their own invoices.

This comprehensive analysis of the judgment from the Appellate Tribunal CESTAT, Ahmedabad provides a detailed insight into the issues of cenvat credit availment on returned goods, interpretation of relevant rules, and the consideration of manufacturer's invoices for credit purposes.