2010 (9) TMI 302 - AT - Central Excise

Cenvat credit returned goods - quality of final products emerges after reprocessing - Commissioner (Appeals) holding that the respondents are eligible for the credit under Rule 16 - party produced before him records during the course of final hearing, and Commissioner verified entries in the RG-1 register and materials issue slips indicating that all the goods which were received back due to shelf life nearing expiry were duly issued for reprocessing - finding of the Commissioner (Appeals) has not been refuted by furnishing any materials in the grounds of appeal Appeal rejected

Summary

Issues:
Department's appeal against Commissioner (Appeals) order regarding reprocessing of duty paid goods under Rule 16 of Central Excise Rules, 2002.

Detailed Analysis:
1. Issue of Reprocessing Claim:
The department appealed against the Commissioner (Appeals) order regarding the reprocessing of duty paid goods under Rule 16 of the Central Excise Rules, 2002. The respondents, a manufacturer of insecticides, weedicides, and fungicides, claimed to have reprocessed goods received back from depots and buyers, clearing the reprocessed goods on payment of duty. The original authority denied the claim, ordering recovery of the amount along with interest and imposing a penalty. The department contended that the claim was ambiguous, lacking technical literature to support the reprocessing, and cited a Tribunal case stating that time-expired goods cannot be received back for reprocessing under Rule 16.

2. Legal Considerations:
The Tribunal examined Rule 16, noting that there was no obligation to file an intimation about the arrival of goods for taking credit. The respondents, under self-removal procedure, were entitled to receive duty paid goods from depots and dealers for reprocessing, subject to conditions. It was undisputed that the goods brought back had earlier suffered duty, and the department did not assert that time-expired goods were involved. The original authority's concerns about the reprocessing criteria and quality of final products were deemed within the manufacturer's purview, with the department unable to dictate the reprocessing method. The Commissioner (Appeals) found the respondents eligible for credit under Rule 16 based on verified records and materials issue slips provided during the final hearing.

3. Decision and Rationale:
After considering submissions from both sides and reviewing the records, the Tribunal upheld the Commissioner (Appeals) decision, rejecting the department's appeal. The Tribunal found the Commissioner's reasoning well-founded, emphasizing the importance of the manufacturer ensuring the quality of reprocessed goods and the lack of evidence refuting the records presented by the respondents. The Tribunal's decision highlighted the manufacturer's responsibility for the reprocessing process and the validity of the Commissioner's findings based on the evidence provided during the proceedings.

In conclusion, the Tribunal's judgment upheld the Commissioner (Appeals) decision, emphasizing the manufacturer's responsibility for reprocessing duty paid goods under Rule 16 and the need for proper documentation and verification to support such claims.