2017 (10) TMI 888 - AT - Central Excise

CENVAT credit - goods returned to the factory - Rule 16 or CER - Held that - as per Rule 16 of the Central Excise Rules, appellant is entitled to take credit of the goods brought back into the factory for reprocessing. The register shown by the appellant clearly indicates that the goods were received and the same were processed and cleared - the invoice have nothing to do with the availability of credit in the instant case - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of cenvat credit on goods returned to the factory.

Analysis:
The appellant, a pharmaceutical company, filed an appeal against the denial of cenvat credit on goods returned to the factory. The appellant argued that they had supplied goods to purchasers who returned some of them, and upon receiving the returned goods, they took credit of the duty paid goods. These returned goods were used in the manufacture of excisable goods and cleared from the factory. The appellant presented the goods return register, which detailed the goods returned, their clearances against various invoices, and the date of clearance. The matter had previously been remanded by the Tribunal to verify if the goods were cleared subsequently, to which the appellant claimed they were cleared after being reprocessed.

The appellant's counsel pointed out that the refund claim was rejected due to discrepancies in the names and batch numbers of the returned goods and the reprocessed goods. However, the appellant provided explanations for these differences, and the goods return register also contained details of gate passes and challans for goods cleared after processing. The appellant contended that the availability of credit should be based on the receipt of goods, not on the clearance after reprocessing.

Upon reviewing the submissions, the Tribunal found that as per Rule 16 of the Central Excise Rules, the appellant was entitled to take credit for goods brought back into the factory for reprocessing. The register displayed by the appellant confirmed the receipt, processing, and clearance of the goods. The Tribunal noted that the revenue's objection was not about the receipt of goods but about the goods cleared by the appellant. The Tribunal agreed with the appellant's explanations for the differences in the names of reprocessed products and found them logical. The Commissioner (Appeals) had denied cenvat credit citing the lack of invoices for reprocessed goods, but the Tribunal determined that the invoices were not crucial for credit availability in this case.

Ultimately, the Tribunal ruled in favor of the appellant, stating that they had established their case, and therefore allowed the appeal. The judgment was pronounced on 12/9/2017.