9911796707
TMI Blog2019 (2) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... ided in favor of appellant. - E/00236, 00237/2011 - FINAL ORDER Nos. 43029-43030/2018 - Dated:- 4-12-2018 - Smt. Sulekha Beevi C.S, Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) For the Appellant: Shri M.N. Bharathi, Adv. For the Respondent: Ms. T. Usha Devi, DC (AR) ORDER Per Bench: The issue involved in both the appeals being the same, they are heard together and disposed by this common order. 2. The appellants are engaged in manufacture of Hot Rolled Black Bars, Coils/Rods in various sections of different grades of steels and sizes falling under Chapter sub-heading 7215 and 7228. They received rejected finished goods under Rule 16 of Central Excise Rules, 2002 and availed credit of the excise duty paid on its removal from the factory. As per the provisions of Rule16(1) of Central Excise Rules, 2002, the assessee, who has received the goods back is entitled to take the Cenvat credit of the duty paid, as if such goods are received as inputs under Cenvat Credit Rules, 2002. If the process to which the goods are subjected to before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the processes such as peeling, pickling, drawing, straightening and grinding of the bright bars, it is reduced in size and the same will be dispatched to other customers or sometimes to the same supplier/customer, who returned the goods. Rule 16 of Central Excise Rules, 2002 contemplates reversal of credit when the returned goods are not subjected to the process of manufacture. It provides for payment of duty if the returned goods are taken into production or subject to process of manufacture and a new product emerges. The appellant s goods falls under second category as the defective Bright Bars are subjected to various processes and become another Bright Bar of different specification and the said process amounts to manufacture. The identity of the defective returned product is lost in this process and, therefore, what is emerging out of this process is new Bright Bar different from the returned defective bar. The lower authorities have wrongly interpreted section note under section XV of Central Excise Tariff. 5. With regard to the allegation that after undertaking processes of pickling, the inputs were cleared to sister Unit by discharging Central Excise duty on discounted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawing or redrawing a rod, wire or any other similar articles into wire, shall amount to manufacture . Again, under Chapter No.4 of Chapter 72 under which bright bars manufactured by the appellants falls, the definition of manufacture reads as follows:- In relation to the products of the Chapter, the process of drawing or redrawing the bar, rod, white rod, round bar or any other similar articles into bright bar shall amount to manufacture. The processes undertaken by the appellants on the returned goods are nothing but peeling, grinding, bend removal, rust removal, straightening etc. These processes are not covered under Note 4 of Chapter 72 as manufacture . Hence, the provisions of Rule 16(2) are not applicable to appellants and they have to pay the amount equal to the Cenvat credit taken by them on the returned goods. The argument of the appellants that they were under the belief that the process undertaken amount to manufacture and that the department had informed them that such processes amount to manufacture is without any factual basis. The letter dated 11.05.2004 does not state that mere processes like grinding, packing, straightening, rust removal, polishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has distinct quality standards (IS 95550 - 1980) compared to the Blackbars (IS 3739 - 1987) used as input. 2. The end uses of Bright bars manufactured by appellants are distinct from that of Black bars used to manufacture them. 3. It invoves processes like heat treatment (annealing), pickling, grinding, peeling etc., besides simple drawing. 10. As seen from the above letter of the Additional Commissioner, the department has clarified to the appellants that the process undertaken by them on customer rejected Bright Bars amounts to manufacture. Since the appellants have sought clarification and the department has replied stating that the process amount to manufacture, the department, thereafter, cannot raise a demand alleging that the appellants have suppressed facts with intention to evade the payment of duty. After receiving the reply from the Additional Commissioner, the appellants have paid duty on the Bright Bars, which are removed after such salvaging process. They thus did not pay the credit availed on the returned goods and instead paid duty on the transaction value as provided under Rule 16 since according to them as well as the clarification of the depart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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