2007 (2) TMI 22

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..... ibility of credit on piston rings manufactured and initially cleared on payment of duty by the appellants and brought back to the factory and converted into scrap and sold, in terms of `Rule 16 of the Cenvat Credit Rules.' 2. I have heard both sides. Rule 16 of the Cenvat Credit Rules provides as under:- "RULE 16. Credit of duty on goods brought to the factory. - (1) Where any goods on which dut .....

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..... r section 4 or section 4A of the Act, as the case may be." 3. On merits, the issue stands decided against the assessees by Tribunal's order in the case of CCE Jaipur-I v. RFH Metal Castings (P) Ltd., 2005 (184) E.L.T. 194, holding that the process undertaken for reducing defective goods to scrap did not amount to manufacture. Therefore, as per Rule 16(2), the assessee is required to pay an amount .....

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..... to Rs.2,00,000/- (Rupees two lakhs only), in Appeal No. E/3897/05. 5. As regards penalty of Rs.25,000/- in Appeal No. E/366/06, since the demand is within the normal period of limitation and the issue relates to interpretation of rules, there is no warrant for imposition of any penalty and accordingly set aside the same. 6. In the result, both appeals are partly allowed by upholding the duty dem .....

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