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TMI Blog2014 (7) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... ussed. The only alternative left is to consider what would be the correct procedure to be followed in accordance with law. Rule 16 deals with returned goods. Whether the returned goods undergo a process of manufacture or not, Rule 16 requires that whatever duty had been paid on the returned goods has to be taken as CENVAT credit and thereafter if the goods have been cleared without undergoing process amounting to manufacture, the credit originally taken should be reversed and if the goods undergo a process of manufacture, duty should be paid on transaction value/MRP based assessments under Section 4A. That being the position irrespective of the process on the returned goods, they have to be necessarily to be added to the inputs account. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No.30/2004-CE dt. 09/07/2004, which provided for exemption to RMG subject to the condition that CENVAT credit is not availed, the appellants opted to avail the exemption. Accordingly, they filed a declaration dt. 09/07/2004 giving the details of stock of finished goods lying in stock on which CENVAT credit availed, CENVAT credit of returned goods cleared from 01/07/2004 to 08/01/2004 and CENVAT credit on inputs in stock. After calculating amount payable by them, the appellants paid a portion of the amount in cash and balance by reversing the CENVAT credit. The appellants also incorporated this information while filing the ER1 return for the month of July 2004. During the audit of the appellants undertaken by the CERA, the audit found out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned and cleared also. She also submits that no evidence has been produced by the appellants to show that this quantity was included in the inputs in stock mentioned by them in the declaration given by them. Further she draws my attention to the observations of the Commissioner (Appeals) in his findings. In the findings under the head Non-accountal of removal of returned goods , the relevant extract reads as under: These three elements of stock of goods are accounted for in books of accounts viz. (i) Annexure 10 (stock of inputs), (ii) Form IV (receipted inputs and their issue for production which is indicative of stock in process goods) (iii) Daily Stock Account (erstwhile RG-1 for finished goods). However, the receipted stock of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position irrespective of the process on the returned goods, they have to be necessarily to be added to the inputs account. Therefore, the normal and natural conclusion would be that the same would be added in the Form IV register or the register which is equivalent to erstwhile RG23A part I register. RG23 Part 1 register unlike Form IV register which relates only to the main raw materials, has to include the RMG returned also. In this case, it is doubtful whether Form IV register would have reflected the returned garments in view of the fact that if the appellant started process of manufacture of garments, fabrics would be the main materials and not the returned garments. In any case, unless it is shown that the appellant was following a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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