2016 (11) TMI 97 - AT - Central Excise

Availing credit on returned goods - Rule 16(1) of Cenvat Credit Rules 2002 - buy-back of non-usable batteries - reliance placed in the decision of Maruti Udyog Ltd. v. C.C.E. Delhi III 2015 (12) TMI 1493 - CESTAT NEW DELHI - The appellant emphasizes that after bringing the unusable batteries back to the factory they retrieved the lead for which is used for manufacturing new batteries; and the remaining material of unusable batteries is sold as waste and scrap on payment of duty of central excise. The appellant claims that new products are made out of unusable batteries. - Held that - subject transaction of the appellant is covered under Rule 16(1) of Central Excise Rules 2002 and the said transaction is not covered within the mischief of Rule 16(2) of Central Excise Rules 2002. It is a fact that retrieved material of old batteries underwent certain processes and was cleared as new battery and as waste/scrap on payment of duty of Central Excise. Therefore following the CESTAT Delhi s decision in the case of Maruti Udyog Ltd. v. C.C.E. Delhi III the appellant is entitled to Cenvat Credit under Rule 16(1) of Central Excise Rules 2002 - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of cenvat credit under Rule 16(1) of Cenvat Credit Rules, 2002 for unusable batteries.

The judgment revolves around the disallowance of cenvat credit to the appellant under Rule 16(1) of Cenvat Credit Rules, 2002, concerning the return of non-usable batteries. The appellant, represented by an advocate, argued that under Rule 16(1), goods can be brought back for various purposes, and they are entitled to claim cenvat credit on these goods as inputs. The appellant relied on a previous case, Maruti Udyog Ltd. vs. C.C.E., Delhi II - 2016(332) ELT 879 (Tri-Delhi), to support their claim.

On the other hand, the Revenue, represented by an authorized representative, contended that cenvat credit is admissible for old unusable batteries only if they are remade, refined, or reconditioned without amounting to manufacture. The Revenue cited a decision from CESTAT, Mumbai, in the case of Kalyani Forge Limited vs. C.C.E., Pune III - 2007 (211) ELT 129 (Tri-Mumbai) to support their argument that the credit on returned batteries is not admissible if they are not brought back for the specified purposes.

After considering all the facts, submissions, and relevant case laws, the tribunal found in favor of the appellant. The tribunal concluded that the appellant's transaction falls under Rule 16(1) of Central Excise Rules, 2002, and is not covered by Rule 16(2). The tribunal noted that the retrieved material from the old batteries was used to manufacture new batteries, and the remaining material was sold as waste and scrap after paying central excise duty. Relying on the decision in Maruti Udyog Ltd. v. C.C.E., Delhi III - 2016 (332) ELT 879 (Tri-Del.), the tribunal held that the appellant is entitled to claim Cenvat Credit under Rule 16(1) of Central Excise Rules, 2002. Consequently, the appeal was allowed, granting the appellant consequential benefits.