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M/s Shri Rathi Steels Ltd. Versus Commissioner of Central Excise, Meerut

Taking credit of of duty paid by the SEZ unit on returned goods - CENVAT credit - whether the appellant manufacturer who cleared finished goods to M/s DLF Ltd (SEZ Developer) under bond without payment of duty and the same were again returned to the appellant by M/s DLF Ltd (SEZ Developer) under bonded Challan for replacement, and on failure of the appellant to replace in the time permitted M/s DLF Ltd. (SEZ Developer) deposited the Excise duty, and claimed reimbursement from appellant, the same .....

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in denying the credit. I hold that the appellant is entitled to take credit under Rule 3 of the Cenvat Credit Rules as they have admittedly received the goods under proper documents reflecting the duty involved and the said duty have been admittedly paid on the removal of the goods, being the SEZ Developer, to the appellant - appeal allowed - decided in favor of appellant. - APPEAL No. E/51912/2015-EX[SM] - Final Order No. 70980/2016 - Dated:- 7-10-2016 - Mr. Anil Choudhary, Member (Judicial) S .....

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and the same were again returned to the appellant by M/s DLF Ltd (SEZ Developer) under bonded Challan for replacement, and on failure of the appellant to replace in the time permitted M/s DLF Ltd. (SEZ Developer) deposited the Excise duty, and claimed reimbursement from appellant, the same was taken credit of by the appellant, whether the said credit was rightly taken by the appellant. 3. The brief facts are that the appellant manufacturer of Bars and Rods of steel and iron etc. cleared and supp .....

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(9) of SEZ Rules, 2006 wherein the Challan is marked "for removal of defective goods to domestic tariff area for replacement, not for sale defective material for replacement, material removed vide permission No. Cus/DLF/Misc./2000/87 dated 05/12/2008" giving the value and the duty involved. Accordingly, vide 8 such Challans the total goods supplied was returned. As the appellant manufacturer could not replace the defective goods within the time permitted, M/s DLF (SEZ Developer) deposi .....

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their Cenvat register. Subsequently, the appellant reversed the Cenvat credit so taken vide Entry No. 3091 dated 11/11/2009. The goods so received back from DLF SEZ were entered in the daily stock register and thereafter removed on payment of duty to a separate set of buyers. The appellant thereafter made an application before the Commissioner on 5th January, 2011, praying that they be allowed to take Cenvat credit of ₹ 10, 57, 084/- paid by them to the SEZ Developer for the defective goo .....

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said rule it appeared, that this rule applies in respect of goods on which duty has been paid at the time of removal and the said goods are subsequently brought back to the factory. The show cause proposed to disallow the Cenvat credit of ₹ 10, 57, 084/- as wrongly taken with further proposal to appropriate from the amount already reversed along with interest and penalty was also proposed. 4. The Show Cause Notice was adjudicated vide Order-in-Original No. 35/Addl. Commissioner/M-II/2014- .....

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014 observing that Rule 16 of Central Excise Rules, 2002 clearly suggest that it is applicable only in respect of those situations where duty had been paid on the finished goods at the time of their initial removal from the factory. Under the facts and circumstances it was held that it is clear that the provision envisaged under Rule 16 of Central Excise Rules, 2002, have not been followed properly. Being aggrieved the appellant is before this Tribunal. 5. The ld. Counsel for the appellant urges .....

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the stock register and thereafter removed the same on payment of duty to other buyers. It is further urged that under the provisions of Rule of Cenvat Credit Rules, particularly Rule 3, the goods has been admittedly received on payment of duty, the appellant is entitled to take Cenvat credit of the same. The ld. Counsel further urges that it is not a case of clandestine removal, the goods were removed under proper ARE -1 procedure under bond to the SEZ Developer. Further, the said developer unde .....

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