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2015 (5) TMI 1011 - CESTAT MUMBAI

2015 (5) TMI 1011 - CESTAT MUMBAI - 2015 (329) E.L.T. 485 (Tri. - Mumbai) - Manufacture - whether the process to which the rejected goods are subjected to does not amount to manufacture and accordingly, on removal of the goods as such, the appellant was required to reverse the Cenvat credit availed? - extended period of limitation invoked - Held that:- In the facts of the appellant’s case, it is evident that the processes of testing of such rejected goods after receipt, does not amount to manufa .....

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extended period of limitation is not invocable. The demand is confined to the normal period from the date of show cause notice. Further, the issue is interpretational in nature. Thus, the penalty imposed is set aside. - Decided partly in favour of assessee - E/2017/2010-Mum - Final Order No. A/1036/2015-WZB/SMB - Dated:- 5-5-2015 - Shri Anil Choudhary, Member (J) Shri Mayur Shroff, Advocate, for the Appellant. Shri V.K. Agarwal, Additional Commissioner (AR), for the Respondent. ORDER This is an .....

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he took Cenvat credit under Rule 16(1) of the Central Excise Rules. However, the rejected goods after being subjected to process of testing were rejected and cleared as scrap to their job workers for melting and conversion into brass bar and cleared under proper invoice, on which applicable duty was charged, which after conversion as bars were purchased by the assessee vide proper invoice. As per Revenue, the rejected goods are cleared as scrap and the process to which the rejected goods are su .....

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of brass components, which are cleared on payment of duty or exported, the appellant are eligible for availing Cenvat credit of duty paid on rejected finished goods. The appellant also placed reliance on the case laws in the case of Alcobex Metals Ltd. v. Commissioner of Central Excise - 1993 (68) E.L.T. 146 (Tri.). The appellant also submitted a statement showing Cenvat credit taken on such rejected goods received back by them during the period 1-9-2005 to 31-8-2007. Thereafter show cause noti .....

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it Rules, 2004 read with Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act. 2.1 The appellant contested the show cause notice stating that the department was having entire knowledge of the activity as the duty paid on scrap cleared was reflected in the ER-1 returns and accordingly, there being no element of suppression or contumacious conduct, extended period of limitation was not attracted under the provisions of Section 11A of the Act. 2.2 As rega .....

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er particulars of its affairs and extended period was held to be invokable. Further, interest was also demanded and penalty imposed of equal amount under Rule 25 of Central Excise Rules read with Section 11AC of Central Excise Act. 2.3 Being aggrieved, the appellant preferred an appeal before the Commissioner (Appeals). The Commissioner (Appeals) was pleased to observe that after receipt of the rejected goods, the appellant subjected the same to testing and segregated repairable and unrepai .....

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saction was properly disclosed in the Books of Account, in the return filed and the same was also enquired during investigation and the stand was taken by the appellant relying on the ruling of this Tribunal in the case of Alcobex Metals Ltd. (supra). It is evident from the text of the Audit Report dated 27-11-2008 wherein reply dated 17-3-2008 & 30-7-2008 of the appellant have been recorded. Thus, a show cause notice was issued on 8-7-2009 almost after 12 months (a few days less), is time-b .....

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b work, no Central Excise duty was charged and it was mentioned in the body of invoice that the goods have been removed for job work and not for sale. Accordingly, there is no actual clearance of the goods, save and except for job work and accordingly, the provisions of Rule 16(2) of Central Excise Rules are not attracted. The ruling of this Tribunal in the case of Jinabakul Forge Pvt. Ltd. v. Commissioner of Central Excise, Belgaum - 2007 (220) E.L.T. 210 (Tri.-Bang.) is not applicable as in th .....

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received, the appellant cleared the rejected goods as waste and scrap and the appellant had availed the Cenvat credit as per Rule 16(1) when the goods were received back and the said goods after the process of melting and remaking were cleared again on payment of duty as applicable. It was further observed that non-marketability of the goods cleared first time contended by the assessee and held, availment of credit on return of goods, which was again finally cleared as scrap. Under these circums .....

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l for the appellant submitted that the period involved in the case is from September, 2005 to March, 2009 and a show cause notice was issued to them on 8-7-2009. Therefore, the majority of the demand involved in the show cause notice is hit by limitation. He also submitted that the applicant has already written a letter to the Revenue on 17-3-2008 and 30-7-2008 informing that the process of melting the said rejected goods to convert them again into brass bars and thereafter further remanufacturi .....

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ue of the show cause notice, the amount involved in respect of the demand comes to about ₹ 55,000/- only. In support of this contention, he submitted that, as per the decision of the Tribunal in the case of Alcobex Metals Ltd. v. CCE - 1993 (68) E.L.T. 146 (T), the applicant is entitled to take the Cenvat credit on the goods received back by them after rejection by the customers. He relied on the decision of the Hon ble Supreme Court in the case of Amco Batteries Ltd. v. CCE, Bangalore - 2 .....

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e, the appellant under the Rule 4(5)(a) of Central Excise Rules, have issued invoice for clearing goods for job work. This fact is further supported from the facts with reference to sample invoice that no Central Sales Tax is discharged on removal of scrap. The show cause notice was adjudicated by the Assistant Commissioner s order dated 12-2-2010 holding that when the appellant received back the rejected goods, there was no wrong on taking of the credit under Rule 16(1). However, when rejected .....

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elied on the ruling in the case of Jinabakul Forge Pvt. Ltd. (supra) and also on the ruling in the case of Birla Corporation Ltd. v. Commissioner of Central Excise - 2008 (224) E.L.T. 567 (Tri.-Mum.), wherein Single Member Bench under the facts that the goods were damaged during transfer and the goods were in transit insurance, which was claimed from the insurance company and as such the goods could not have been used as input and as such availing of Cenvat credit was found to be not acceptable .....

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