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TMI Blog2018 (2) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... id returned chassis. Thereafter, the returned chassis were subjected to detailed examination and wherever found possible certain replacements and modifications have been carried out and were cleared thereafter. In such a situation, the appellants reversed the credit which was re-taken at the time of return of the said chassis. There is no dispute on this aspect. However, certain numbers of chassis have undergone certain extensive processes. The appellants claim that the processes undertaken on such chassis will virtually amount to manufacture and as such the revalued product will suffer duty as and when they are cleared without attracting the provisions of Rule 16 for exact reversal of re-credit taken on return of these chassis. The Revenue entertained a view that the processes undertaken by the appellant on such returned chassis will not amount to manufacture of any new item. Any amount of repair or re-fixing or addition/replacement will not amount to manufacture and accordingly applying the provisions of Rule 16 the appellant is liable to reverse the re-credit taken on such returned chassis. On this basis various proceedings were initiated against the appellants. They have filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roper disengagement of gear which had impact on transmission and forward movement of the vehicle. Further, explaining that a new vehicle model number is built on the old chassis frame which carried chassis number to identify the salvaged parts while rebuilding. The affidavit further asserted that in majority of cases the chassis had been assembled with new engine/steering system and consequently there have been model change on account off changes brought about in transmission. However, the affidavit concluded that the full details of dismantling, salvaging and re-assembling of new model chassis had been managed and accounted with ERP software system relevant during that time. Since the appellants have switched over to SAP system in April 2012 it is not immediately possible to give elaborate and specific supporting evidences as per the requirement of the Bench. d) The Ld. Counsel also submitted that in case of re-credit availed returned goods having cleared again involves an additional requirement of payment there is no machinery to demand such payment under Rule 16. Section 11 A will not be attracted automatically. e) It is also submitted that certain numbers of chassis were in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onafide belief against imposition of penalties. 5. Heard both sides and perused the records. 6.1 On the first point, we note that the appellants received duty paid motor vehicle chassis due to various defects. Admittedly, the appellants after due scrutiny of the returned chassis undertook certain processes to make them fit for use. The type of processes undertaken varied. The appellants admit when they have taken simple replacement of defect parts they are liable to reverse the re-credit taken upon second clearance of the goods. This is not in dispute. Regarding various other chassis, the claim of the appellant is the processes are so elaborate involving dismantling and re-assembling which will be outside the scope of simple reversal of availed credit and make them as fresh clearances of re-manufactured items subjected to valuation and duty liability as relevant at the time of clearance. We note for this, it is necessary to have a detailed processes undertaken in such cases. We have noted the affidavit filed today by the appellants. Admittedly, the affidavit also clearly states that they have undertaken various replacements of the components. It is also admitted that the chassis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2), the assessee may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the Commissioner. Provided that for the purposes of this rule, assessee shall include wire drawing unit, which has cleared he goods on payment of an amount equal to the duty at the rate applicable to drawn wire on the date of removal and on the value determined under relevant provisions of the Act and the rules there under: Provided further that the amount paid under the first proviso shall be allowed as Cenvat credit as if it was duty paid by the assessee who removes the goods." 6.2 From the above provisions, it is clear that when the assessee subjected the goods to processes not amounting to manufacture, they shall pay an amount equal to the Cenvat credit taken sub-rule (1). In other words, the re-credit taken upon return of the goods for being remade or refined, re-conditioned or for any other reason, upon completion of such processes, the re-credit taken shall have to be reversed as and when the said goods were cleared. The sub-rule (2) further provides to say that if the goods returned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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