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2023 (10) TMI 958 - CESTAT BANGALORECENVAT Credit on rejected inputs - suo moto credit - process amounting to manufacture or not - goods received in their factory and subjected to various processes like blackening, buffing, final inspection, packing etc. which were subsequently exported, without payment of duty. Admissibility of CENVAT Credit of Rs. 2,40,75,746/- on the inputs/goods subjected to various processes viz. blackening, buffing, final inspection, packing etc. in the factory and the resultant the finished goods were exported - HELD THAT:- No evidence has been placed by the Revenue in support of the allegation that without subjecting the received inputs to various processes by the appellant, these goods be considered as marketable and could be exported as it is. The processes undertaken by the appellant are necessary to put the product in marketable condition as per the requirement of the customers; the appellants, on the other hand, adduced evidence in the form of rejection letters of the customers rejecting the goods supplied by the Appellant as it did not meet their requirement as per the order placed. Hence, various processes blackening, buffing, final inspection, packing etc. carried out on the inputs be considered as processes amounting to manufacture. More or less similar principle has been laid down by the Hon’ble Apex Court in the case of FLEX ENGG. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [2012 (1) TMI 17 - SUPREME COURT] where it has been observed In the absence of the revenue having adduced any such evidence or contorted the assessee’s claim that the machines cannot be sold unless testing is done with some alternative evidence as to their marketability, the stand of the revenue cannot be accepted. Therefore, the processes carried by the appellant in their premises result into manufacture and accordingly, CENVAT Credit availed on the duty paid on inputs received is admissible to the appellant. Suo moto credit - HELD THAT:- The credit of Rs. 28,700/- is irregular in view of the judgment of Larger Bench of this Tribunal in the case of BDH INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX. (APPEALS) , MUMBAI-I [2008 (7) TMI 78 - CESTAT MUMBAI-LB]. The impugned Order is modified to the extent of setting aside demand of CENVAT credit of Rs.2,40,75,746/- with interest and penalty, however, the recovery of suo moto credit of Rs.28,700/- with interest and penalty is confirmed - Appeal disposed off.
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