2017 (3) TMI 862

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..... it on the equipment which were received back for reconditioning/repair or otherwise. 4. The appellant is a manufacturer of laboratory equipments. Appellant discharged Central Excise duty on the said goods when cleared to the customers. Some of the customers of the appellant rejected the said laboratory equipment for fault which are brought back by the appellant under their own invoice or on the invoice issued by the client. Appellant operated under the provisions of Rule 16 of the Central Excise Rules, 2002 and availed CENVAT credit of such duty paid on the laboratory equipment received back. It is contended before me that the appellant as far as possible repairs the said equipment and clears the same to the customers. In some cases, the l .....

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..... for being re-made or salvaged to the extent possible. We find that the case of the appellant is clearly covered by the provisions of Rule 16(1). The said rule permits Cenvat credit of the duty paid as if such goods are received as inputs under the Cenvat Credit Rules, 2002 and to utilize this credit according to the said rules. Clearly a legal fiction has been created in this rule. In normal course duty paid motor vehicle cannot be an input for making same type of motor vehicle. Here the said vehicle is deemed to have been input only because it is brought into the factory for being re-made, refined, re-conditioned or for any other reason. We find the scope for which a duty paid vehicle can be brought to the factory is very wide and includes .....

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..... in the process of using the damaged vehicle in further manufacture. As already explained and held by the Tribunal the process undertaken by the appellant is not simple repair but amounts to manufacture of new motor vehicle. The dismantling/salvaging is part and parcel of such manufacturing process. In view of this, we find that credit of duty paid at the time of initial clearance is available in full to the appellants. Apportioning the credit for salvaged and usable parts and non-usable scrap is not having support of any provision of law. Further, it should be noted that while the usable salvaged items were put into manufacturing stream of new vehicle, the unusable items were cleared by the appellant on due payment of duty. As such, there .....

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