TMI Blog2015 (12) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... lished beyond doubt that no process has been carried out on the returned goods. Therefore, on the question of whether first part of sub-rule or the second part of sub-rule of Rule 16 is applicable, we find on the very same issue has been dealt in detail by the Tribunal’s co-ordinate Bench, Mumbai in the case of M/s. Apollo Tyres Ltd. Vs. CCE, Pune-II (2010 (2) TMI 846 - CESTAT, MUMBAI) allowed the appeal. - issues are identical and the duty paid goods are rejected and returned to the factory of the assessee and without doing any processes the said goods were sold by auction to third party “as is where is basis” and cleared on payment of excise duty on the transaction value as per Section 4 of the Central Excise Act. - appellants are not liable to pay the amount equal to cenvat availed on the returned goods. Accordingly, the demand is set aside in the assessee s appeal. Consequently, they are not liable for any penalty and the same is also set aside. - Decided in favour of assessee. - Appeal E/80/2007, Appeals E/61, 64, 66, 68, 69,71/2012 - Final Order No. 41632- 41637 / 2015 - Dated:- 26-11-2015 - Shri R. Periasami, Technical Member Shri P.K. Choudhary, Judicial Member For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before this Tribunal. 4. The Ld. Advocate representing the appellant assessee submitted a written synopsis and reiterated the same. He submitted that they followed the procedure set out in Rule 16(1) of CER for return of the finished goods rejected and taken cenvat credit on the duty paid on them. He further submitted that the goods were rejected by the customers on account of technical defects, quality/ dimensional defects, cancellation of orders/indent, cancellation of schedule and change of schedule etc. He submitted that the same goods were after inspection, resold under auction to the highest bidder on as is where is basis . While clearing them they pay excise duty as per the transaction value at the time of resale. He drew the attention of the Bench to the allegation in the SCN at para 6 and 6.1 at page 119, where the department alleged that visual inspection is process whereas the adjudicating authority in his order at para 5.1 and 5.5 clearly held that no process undertaken by them. He further submitted that if no process is undertaken, first leg of Rule 16(2) will not be applicable and the second leg of Rule 16(2) will apply. He also submitted that Rule 16 (3) is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the Commissioner (Appeals) allowed their appeal by following the Tribunals decision in th case of Apollo Tyres Ltd. (supra). He further submitted that again they have changed their method of paying duty only on the transaction value w.e.f. October, 2012, where the department issued SCN demanding differential duty, which is still pending for the period from June, 2010 to April, 2014. Therefore, he prayed that in view of the Tribunals decision in the case of Apollo Tyres Ltd. (supra) and this Tribunal s decision in the case of Craftsman Automation Ltd. (supra), the demand is not sustainable in the assessees appeal and they are eligible for refund and to uphold the Commissioner (Appeals) order and to reject the Revenue appeals. 7. The Ld. AR appearing on behalf of the Revenue reiterated the findings of the OIO. On the limitation, she submitted that the returns are filed before the Superintendent under Rule 12, whereas returns of duty paid goods rejected was received under Rule 16(1), where the intimation was filed before the authority. She drew our attention to para 5.8 of the OIO and submitted that the appellants having one unit at Maharashtra and the other unit at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other case stated in the said sub-rule. We find that both sides sought to interpret the provisions of Rule 16 in their own way. The period of dispute is from 01.07.2001 to 30.06.2005 in the assessees appeal and from July, 2007 to March, 2010 in the Revenues appeals. Since the whole issue revolves on interpretation of Rule 16, the same is reproduced as under:- 16. Credit of duty on goods returned to the factory.- (1) Where any goods on which duty has been paid at the time of removal thereof are subsequently returned to the factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such return in his records and shall be entitled to have CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2001 and utilise this credit according to the said rules. (2) If the process to which the goods are subjected before returning does not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on goods returned under sub-rule (1) at the rate applicable on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the instant case, the tubes returned by the original consignee were removed as such without any process whatsoever. Even the show-cause notice admits these facts. The question is whether the second clearances of the goods would be covered by the first part of sub-rule (2) of Rule 16 as canvassed by the Revenue or by the second part of the sub-rule as contended by the assessee. In this context, it is pertinent to note that the goods returned by the original assignee were admittedly received by the assessee under sub-rule (1). They were received in the assessee s factory for being re-made, refined, re-conditioned or for any other reason . Learned SDR has chosen to read the underlined expression ejusdem generis with the preceding expressions (re-made, refined, etc.). He means to say that, under sub-rule (1) of Rule 16, duty-paid goods returned by a customer can be brought back to the factory of production only for some kind of a process. On the other hand, the learned counsel has argued that such goods could be brought back into the factory of production for any other reason also. He submits, the appellant cleared the goods as such, for logistic reasons , to other tyre-manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances, as in the instant case, are also covered by the expression any other case figuring in the second part of sub-rule (2). It would follow that the duty paid by the appellant on their second clearances of tubes is in order and no additional amount of duty can be demanded from them. 6. In the result, the demand of duty is set aside on merits and consequently there can be no penalty on the appellant either. The appeal is allowed with consequential relief to the appellant. Further, this Tribunal Bench in the case of Craftsman Automation (P) Ltd. Vs. CCE, Coimbatore (supra), in its order dated 27.04.2011 on identical issue followed the above decision and allowed the appeals. The relevant portion of this order is reproduced as under:- 2. I have heard both sides. Rule 16(2) stipulated that if the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on the goods received under sub-rule (1) at the rate applicable on the date of removal and on the value determined under sub-section (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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