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TMI Blog2023 (9) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... first part of Rule 16(2) is applicable the second part will not apply. The phrase in any other case will not cover a case where no process of manufacture has taken place. The facts of clearance involved in the present case is also the same. Goods which were initially cleared for home consumption and later found unfit for use were brought back to the factory and were then cleared as scrap without putting them to any further process amounting to manufacture. As no process was involved the first part of Rule 16(2) would come into play and the goods were to be cleared after paying an amount of duty equal to the CENVAT credit taken. The appellant has stated that the lower authority had failed to see that there was no intention to evade p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d returned metal containers (final products) received in their factory under the provisions of Rule 16 of the Central Excise Rules, 2002. But it appeared that they had not observed the procedure laid down in sub-rule (2) of Rule 16 of the Central Excise Rules, 2002 for paying duty equivalent to the CENVAT credit taken at the time of subsequent clearance. On pointing out the same, the appellant debited the excess credit availed amounting to Rs.2,20,756/- but did not pay the interest due on the same. Hence a Show Cause Notice was issued to the appellant demanding differential duty of Rs.2,20,756/- along with interest and penalty under Rule 11AC r/w Rule 25 of the Central Excise Rules, 2002 and penalty under Rule 26 of the said Rules. After du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (2) of Section 3 or 4 or Section 4A of the Act, as the case may be. Further, there was no intention on their part to evade payment of duty as they had followed the procedure as per the Rules. Hence they were not liable to pay any interest and penalty. He prayed that the impugned order may be set aside and the appeal allowed. 6. Shri Rudra Pratap Singh, learned Additional Commissioner (AR) appeared on behalf of the Revenue. He stated that as per sub-rule (2) of Rule 16 of Central Excise Rules, 2002, there was no requirement to presuppose any process before the removal of the defective goods for the second time. As per Rule 3(5) of CENVAT Credit Rules, 2004, any input or capital goods cleared as such , then the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-rule shall be allowed as Cenvat credit as if it was a duty paid by the manufacturer who removes the goods. (3) If there is any difficulty in following the provisions of sub-rule (1) and sub-rule (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 . Rule 16(2) hence consists of two separate situations as below: (1) when the process to which the goods are subjected before being removed does not amount to manufacture. (2) in any other case. The treatment of the goods to duty at the time of clearance in the above two situations varies, as provided for in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second clearance should be made in terms of the first part of Rule 16(2) as demanded by the Revenue or as per the later part of Rule 16(2) as prayed for by the appellant. It is the appellants contention that the expression employed in the second part of Rule 16(2) is in any other case . The said expression takes into its ambit not only a case where returned goods are subjected to a process of manufacture but also cases not covered by first part of Rule 16(2). We find from a plain reading of Rule 16(2) that if the first part of Rule 16(2) is applicable the second part will not apply. The phrase in any other case will not cover a case where no process of manufacture has taken place. We find that a similar issue has come up for conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g out of a process of manufacture. We are of the view that the appellant cannot claim that the waste and scrap which arises from rejected goods, are due to the process of manufacture as there is no manufacture, involved in the process, as is explained by the appellant before us as well as before the lower authorities. Accordingly, we find that the impugned order, to the extent it confirms the demand is correct and legal and does not require any interference. The facts of clearance involved in the present case is also the same. Goods which were initially cleared for home consumption and later found unfit for use were brought back to the factory and were then cleared as scrap without putting them to any further process amounting to manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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