9911796707
TMI Blog2013 (9) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... rial account, had been subsequently issued for production in the normal course and the final products emerged had been accounted for in the daily production register. Forgings had been cleared on payment of duty by the assessee to their buyers, that the latter found the same to be defective and returned the same under proper duty-paying documents to the assessee and that the goods were subjected to some process - if correlation was established between the defective forgings and the defect-free forgings, the assessee was entitled to the credit in question - This correlation was established at the original level and the same was not cogently challenged by the Revenue before the Commissioner (Appeals) - In any case, it is not the case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured out of the defective goods returned earlier by their buyers and therefore they were not entitled to treat the defective goods as input and take Cenvat credit thereon. The department, therefore, issued a show cause notice seeking to recover the Cenvat credit which had allegedly been availed irregularly by the assessee, levy interest thereon under Section 11AB of the Central Excise Act and impose penalty on the assessee under Section 11AC of the Act read with Rule 25 of the Central Excise Rules, 2002. These proposals were contested by the party. The original authority dropped these proposals after hearing the party and considering their submissions. It recorded inter alia the following findings with regard to the manner in which the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking or similar process as indicated in Rule 16 of the Central Excise Rules, 2002. (ii) The goods have been melted and that means the goods were not reconditioned or remade as being goods, but treated as scrap, and recycled, and molten materials mixed with other molten materials whereupon entirely new goods have emerged. (iii) Rule 16 of Central Excise Rules, 2002, is a facility for dealing with goods requiring minor or more repair, reconditioning, etc., and not for recycling their material, in which process they lose their identity in a manner that the material obtained after melting them is used partly or wholly for different set of goods afresh. (iv) The respondent has not followed the procedure stipulated in the Rule 16 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with goods requiring minor or more repair, reconditioning etc., and not for recycling their material, in which process they lose their identity in a manner that the material obtained after melting them is used partly or wholly for different set of goods afresh. It is submitted that the appellant had followed the procedure stipulated under Rule 16 ibid by subjecting the defective/returned to the process of remaking forgings free from defects and, therefore, their entitlement to Cenvat credit of the duty paid on the said defective goods is beyond question. The learned consultant further submits that the learned Commissioner (Appeals) proceeded on the wrong presumption that no correlation had been established between the defective goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moval thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take Cenvat credit of the duty paid as if such goods are received as inputs under the Cenvat Credit Rules, 2002 and utilize this credit according to the said rules. 7.1 The assessee took Cenvat credit of the duty paid on the defective goods returned by their buyers. Subsequently, according to them, they remade defect-free forgings from the said goods and cleared the same on payment of duty. The original authority, upon verification of records and hearing the party vis- -vis allegations in the show cause notice, found appropriate correl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at the original level after verification of records. There is no material on record to indicate that any fresh verification of records was made by the appellate authority. Even the grounds of the Revenue s appeal before the Commissioner (Appeals) do not go to show that the claim of correlation of goods was challenged in the said appeal. 7.2 It is not in dispute that forgings had been cleared on payment of duty by the assessee to their buyers, that the latter found the same to be defective and returned the same under proper duty-paying documents to the assessee and that the goods were subjected to some process. It is also not in dispute that, subsequently, defect-free forgings were cleared on payment of duty by the assessee. Even accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
