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2014 (7) TMI 695 - AT - Central ExciseAdmissibility of credit on duty paid goods on their return to the factory - Applicability of Rule 16(3) - Held that:- finished duty paid goods have been deemed to be inputs for the purpose of taking credit as per Cenvat Credit Rules, 2004. A combined reading of Rule 16 (1) and 16(2) of Central Excise Rules, 2002 clearly conveys that processes undertaken by the recipient of duty paid goods need not amount to manufacture for taking credit and this Rule talks only of admissibility of Cenvat credit on return of duty paid goods. The processes undertaken may or may not lead to manufacture. There could be a situation where duty paid goods received in the factory for certain processes may not amount to remanufacture or certain goods received back as rejected may be sold to another client without even carrying any process. The whole intention of Rule 16 of Central Excise Rules, 2002 is that a manufacturer should not be made to pay the duty with respect to certain processes on return which may not amount to manufacture. At the same time, it is also essential that a manufacturer does not clear freshly manufactured goods free of duty in the guise of reprocessing of duty paid goods received in the factory. To check this misuse, Revenue may be well within its right to ask the appellant to provide their internal records/ process cards to establish that duty paid goods returned to the factory, for which credit has been taken, have been subsequently removed on payment of duty or were cleared as such where equivalent amount of cenvat credit taken has been reversed. - Matter remanded back - Decided in favour of assessee.
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