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2016 (3) TMI 66 - AT - Central ExciseReversal of credit equal to the cenvat credit availed on the input - damaged/rejected goods cleared - Respondents are alleged to have failed to pay duty equal to the duty taken as credit on the inputs cleared as damaged/rejected prior to use in manufacture of final product as prescribed - Held that:- Inputs sold as scrap in terms of Section 4 of the Act on transaction value has originated from the manufacturing process followed in the petroleum industry. Once the input is rejected during manufacturing process and sold at the transaction value under Section 4 of the Act, the dept. has no case for asking the reversal of credit equal to the cenvat credit availed on the input. It is immaterial if the shape & size as well as classification of the input remains the same after rejection. It is different matter if the said rejected barrels are used as such for different purpose. These are considered to be waste for the appellants as these are not qualified as per the quality standard adhered by them. The dept. has not proved that the appellants have received more value from the buyer of rejected barrels than the value shown in the invoices for charging Central Excise duty. It is also not the case that the rejected barrels are recycled & purchased again by the appellants. In view of above, it seems to be more assumption & presumption as pleaded by the appellants, based upon which show cause notice issued & confirmed by the lower adjudicating authority since the dept. has not found any hole in procedure adopted by the appellants on receipts, manufacturing, clearance and accounting of transactions which is based on Standard Operating Procedures under which every single material is assigned an unique number/codes as explained by them in their defence reply. In the circumstances as discussed above do not find any merit in the case, therefore the impugned order is not sustainable under the law - Decided against revenue
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