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2014 (6) TMI 757 - ALLAHABAD HIGH COURTDenial of CENVAT Credit - Denial on the ground the goods on which credit taken was not raw material - Whether in view of the specific provisions under Rules, 173H and 173L of the Central Excise Rules, 1944, re-making, refining, re-conditioning, repairing or similar processes on defective goods returned to the manufacturer of the final products can be treated as an input for purpose of Rule 57A of the Central Excise Rules, 1944 - Held that:- By process of redrawing, reducing the thickness, softening, smoothing hardness etc., a new final product was being obtained and had been cleared on payment of duty. Such process has been treated as manufacturing by the party as well as by the respondent. If such process would not have been treated as manufacturing the final product would not have been taxed and would be exempted from payment of duty. It is not the case of Revenue that such process has not been treated as manufacturing and duty has not been assessed. - modvat credit claimed by the party can not be said to be erroneous. Under Rule 173L of the Rules, the party could claim the refund in case of goods returned but merely because that the refund of the duty paid on the finished goods, which have been returned being defective has not been claimed under Rule 173L of the Rules, the claim of the modvat credit under Rule 57-A of the Rules can not be denied. Defective goods, may be final product, have been subjected to such process which amount to manufacturing within the definition of manufacturing under Section 2(f) of the Central Excise Act and as a result of such process a final product is obtained which is subjected to excise duty. The modvat credit under Rule 57-A of the Rules is admissible, if other conditions of Rule are fulfilled and claimed can not be denied on the ground that the assessee would have claimed refund of duty paid under Rule 173L of the Rules. - Decided against Revenue.
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