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2014 (9) TMI 866 - AT - Central ExciseCENVAT Credit on returned / damaged goods - Rule 16 of central excise rules, 2002 - Whether process of re-conditioning and repacking of yarn amounted to manufacture or not - Held that:- From the perusal of nature of process undertaken, it is observed that in yarn industry, it is not possible to undertake re-winding or remanufacturing of yarn. It is also noted that the respondents have not been able to show that yarn which was received back after repacking could be re-sold without disturbing the original quality and keeping the nature of the yarn intact. Further no evidence, documentary or otherwise has been brought on record. As the benefit has been availed by the assessee, thus burden was upon them to discharge the same. Revenue s allegation that no entries relating to return of goods in ER-1 return have indicated that damaged goods have really come back strengthen the case of Revenue as above conclusion is based on documentary evidence. I also agree with Revenue that Commissioner (Appeals) s observation that goods have passed the test of manufacture once they are returned under Rule 16 of Central Excise Rules, 2002 has no force. There is considerable strength in departmental contention for invocation of larger period. Though respondents have cleared that receipt and clearance was shown in return. Actually there is no clear description in return indicating receipt of yarn repacking/reconditioning. Similarly there is no mention of reconditioned yarn being cleared. All these factors indicate clandestine nature of activities for which invokation of extended period of limitation is justified. - re-winding or reconditioning of the yarn is impossibility and no credit on the return goods is admissible as returned goods could not be re-manufactured and documentary evidence is also against respondent - Decided in favour of Revenue.
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