TMI Blog2000 (6) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... led despite notice. 3. The Tribunal had by the impugned Final Order upheld the Order-in-Appeal passed by the Commissioner (Appeals) holding that modvat credit will be available on finished goods returned to the manufacturer of finished goods by the customer by reason of the goods being defective. STATEMENT OF CASE 4. Ld. JDR has argued that in the instant case the Respondents who were manufacturers of C.R. Coils/sheets and G.P. Coils/sheets received their inputs from various suppliers and they had been taking modvat credit on the duty paid on the inputs. Some of the purchasers of their finished products returned the goods to them as the goods were defective. Respondents thereupon took credit on the defective goods treating them as inp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacturer by the buyer. Likewise, in the case of ASSK Engineers v. CCE [1998 (97) E.L.T. 99 Mumbai CEGAT)], the Tribunal had taken the view that where the operation undertaken on the returned goods in the appellant's factory was only removal of defects, which did not amount to manufacture, the Department would be justified in disallowing modvat credit. A two Member Bench of the Tribunal had in Escorts Ltd. v. CCE [1993 (68) E.L.T. 682] held that in the case of rejected or defective goods brought back to the manufacturer's unit for re-conditioning and repairs would not be eligible for modvat credit since no manufacturing activity was involved. Having regard to the decisions in the aforesaid orders of the Tribunal and the view taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were not to be re-melted but only further processed for removing the defects. There were provisions in the Central Excise Rules such as Rule 173H and 173L which provide for receiving of defective goods by a manufacturer for re-making, re conditioning, repairing etc. Such goods are not eligible for Modvat credit. 7. We find that a certain ambiguity does exist in the matter. In the light of the above discussion, we argee with the Revenue that a question of law has arisen which requires to be referred to the Hon'ble High Court for its considered opinion under Rule (sic.) 35G of the Central Excise Act, 1944. 8. Accordingly, we refer the following question of law to the Hon'ble High Court, Allahabad for its considered opinion under the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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