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TMI Blog2013 (9) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... and Education Cess totalling to Rs. 2,24,154/- on the goods when cleared to the buyers and the latter had taken Cenvat credit thereof. The defective goods were returned by the buyers under cover of statutory invoices and the appellant took Cenvat credit on the goods on the strength of these invoices. According to the appellant, they reprocessed the defective goods into fresh defect-free products and removed these products on payment of duty. According to the Revenue, the assessee could not prove that the fresh products cleared on payment of duty had been manufactured out of the defective goods returned earlier by their buyers and therefore they were not entitled to treat the defective goods as 'input' and take Cenvat credit thereon. The dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers. As, in this case, the goods returned by the buyers to the assessee were covered by proper duty-paying documents, the findings and observations relating to Annexure-58 are of no relevance. 3. The Order-in-Original was reviewed in the department and an appeal preferred to the Commissioner (Appeals). The grounds of that appeal are seen listed out in para 3 of the Order-in-Appeal and the same read as under : (i) Although the goods were received and accounted for in their registers, the goods were not subjected to processes like reconditioning, remaking or similar process as indicated in Rule 16 of the Central Excise Rules, 2002. (ii) The goods have been melted and that means the goods were not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11AC of the Act. Aggrieved by the appellate Commissioner's decision, the assessee filed the present appeal. 5. Learned consultant for the appellant submits that no re-melting of the goods returned by the buyers was involved in the reprocessing thereof and, therefore, the main finding recorded by the learned Commissioner (Appeals) is factually incorrect. In this connection, the learned consultant has referred to the finding contained in the opening sentence of para 8 of the impugned order, which reads thus : "I agree with the department's contention that Rule 16 of Central Excise Rules, 2002, is a facility for dealing with goods requiring minor or more repair, reconditioning etc., and not for recycling their material, in which process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed from the defective goods. In other words, there is no correlation between the goods on which the credit in question was availed by the assessee and the final product which was cleared by them on payment of duty subsequently. In this scenario, according to learned DR, the appellant cannot claim the benefit of Cenvat credit on the goods returned by their buyers. 7. I have given careful consideration to the submissions. Rule 16(1), which is the focal point in this case, reads as under : "Rule 16(1) - Credit of duty on goods brought to the factory - (1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue was that there was no evidence to prove that the goods received under Rule 16 had been cleared subsequently under appropriate document and on payment of appropriate duty. It was alleged that the subsequent dispatch documents did not indicate that the goods cleared thereunder were the ones that were received under Rule 16 for rework. The original authority found that the defective goods received by the assessee from their buyers under proper duty-paying documents under Rule 16 had been subjected to a process mentioned under the Rule and the fresh product cleared on payment of duty. Thus correlation was established at the original level after verification of records. There is no material on record to indicate that any fresh verifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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