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2015 (5) TMI 93 - AT - Central ExciseReversal of credit - removal as such - parts, which were originally imported, and subsequently found defective, consequently re-exported. As per Revenue, the same amounts to clearance of the inputs, as such, thus, invoking the Provisions of Rule 3 (5) of the Cenvat Credit Rules, 2004 - Held that:- Findings of the Adjudicating Authority that the inputs are found defective or damaged prior to their issuance from the store are factually incorrect. It stands described in the show cause notice dated 21.03.2012 that the appellants factory was visited by the Officers and the process of manufacture of finished goods was examined. It stands mentioned in the show cause notice that the components were issued from the store room to the production floor where assembly of the components/finished products takes place. Further, the notice referred to the statements of various senior personnels of the assessee company clearly deposing that the testing is done either during the manufacturing process or after the assembling of the components. The conclusion in the show cause notice is also to the effect that the practice of the component being followed is known to the assessee only during the process of testing in the assembly line, as prior testing of the component before assembling is not being done by the assessee. As such, we are of the view that the findings of fact arrived at by the adjudicating authority in the impugned order are incorrect. Once the inputs are issued for manufacture of the final product and are further used and are found defective in the assembly line, the assessee cannot be asked to reverse the credit. Reference in this regard can be made to the Hon ble Delhi High court decision in the case of Asahi India Safety Glass Ltd. vs. Union of India reported in [2004 (9) TMI 118 - HIGH COURT OF DELHI]. In-fact, the following decisions deal with an identical situation, where the inputs originally imported were subsequently, re-exported on being detected as damaged or faulty. - Impugned order is set aside - Decided in favour of assessee.
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