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2023 (10) TMI 958 - AT - Central ExciseCENVAT Credit on rejected inputs - suo moto credit - process amounting to manufacture or not - goods received in their factory and subjected to various processes like blackening, buffing, final inspection, packing etc. which were subsequently exported, without payment of duty. Admissibility of CENVAT Credit of Rs. 2,40,75,746/- on the inputs/goods subjected to various processes viz. blackening, buffing, final inspection, packing etc. in the factory and the resultant the finished goods were exported - HELD THAT - No evidence has been placed by the Revenue in support of the allegation that without subjecting the received inputs to various processes by the appellant, these goods be considered as marketable and could be exported as it is. The processes undertaken by the appellant are necessary to put the product in marketable condition as per the requirement of the customers; the appellants, on the other hand, adduced evidence in the form of rejection letters of the customers rejecting the goods supplied by the Appellant as it did not meet their requirement as per the order placed. Hence, various processes blackening, buffing, final inspection, packing etc. carried out on the inputs be considered as processes amounting to manufacture. More or less similar principle has been laid down by the Hon ble Apex Court in the case of FLEX ENGG. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE 2012 (1) TMI 17 - SUPREME COURT where it has been observed In the absence of the revenue having adduced any such evidence or contorted the assessee s claim that the machines cannot be sold unless testing is done with some alternative evidence as to their marketability, the stand of the revenue cannot be accepted. Therefore, the processes carried by the appellant in their premises result into manufacture and accordingly, CENVAT Credit availed on the duty paid on inputs received is admissible to the appellant. Suo moto credit - HELD THAT - The credit of Rs. 28,700/- is irregular in view of the judgment of Larger Bench of this Tribunal in the case of BDH INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX. (APPEALS) , MUMBAI-I 2008 (7) TMI 78 - CESTAT MUMBAI-LB . The impugned Order is modified to the extent of setting aside demand of CENVAT credit of Rs.2,40,75,746/- with interest and penalty, however, the recovery of suo moto credit of Rs.28,700/- with interest and penalty is confirmed - Appeal disposed off.
Issues involved: Determination of admissibility of CENVAT Credit on inputs subjected to various processes and admissibility of suo moto credit.
Admissibility of CENVAT Credit: The appellant availed CENVAT Credit on goods received in their factory subjected to processes like blackening, buffing, final inspection, packing, and subsequently exported. The Revenue alleged that these goods were in the nature of finished goods and the processes did not amount to 'manufacture' as per the Central Excise Act. The appellant argued that the processes undertaken were necessary to make the goods marketable as per customer requirements. The Tribunal found that the processes carried out by the appellant resulted in manufacture, as detailed evidence was provided showing the necessity of these processes for marketability. Citing the principle established in the case of Flex Engineering Ltd, the Tribunal held that the processes amounted to manufacture, making the CENVAT Credit admissible. Admissibility of Suo Moto Credit: Regarding the suo moto credit of Rs. 28,700/- availed by the appellant on rejected inputs, the Tribunal found this credit to be irregular based on the judgment of a Larger Bench of the Tribunal in the case of BDH Industries Ltd vs. CCE, Mumbai. Therefore, the Tribunal confirmed the recovery of the suo moto credit with interest and penalty while setting aside the demand for the CENVAT Credit of Rs. 2,40,75,746/-. Decision: The impugned Order was modified to set aside the demand for the CENVAT Credit of Rs. 2,40,75,746/- with interest and penalty. However, the recovery of the suo moto credit of Rs. 28,700/- with interest and penalty was confirmed. The appeal was disposed of accordingly.
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