9911796707
TMI Blog2023 (9) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... al containers (drums and barrels) falling under Chapter 73 of the Schedule to the CETA, 1985. On perusal of their CENVAT invoices relating to the rejections, it appeared that the appellant had availed credit on all rejected and returned metal containers (final products) received in their factory under the provisions of Rule 16 of the Central Excise Rules, 2002. But it appeared that they had not observed the procedure laid down in sub-rule (2) of Rule 16 of the Central Excise Rules, 2002 for paying duty equivalent to the CENVAT credit taken at the time of subsequent clearance. On pointing out the same, the appellant debited the excess credit availed amounting to Rs.2,20,756/- but did not pay the interest due on the same. Hence a Show Cause N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Their case is covered by the situation 'any other case' of Rule 16(2) whereby they are required to pay duty on 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 Section 3 or 4 or Section 4A of the Act, as the case may be. Further, there was no intention on their part to evade payment of duty as they had followed the procedure as per the Rules. Hence they were not liable to pay any interest and penalty. He prayed that the impugned order may be set aside and the appeal allowed. 6. Shri Rudra Pratap Singh, learned Additional Commissioner (AR) appeared on behalf of the Revenue. He stated that as per sub-rule (2) of Rule 16 of Central Excise Rules, 2002, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) at the rate applicable on the date of removal and on the value determined under sub-section (2) of Section 3 or 4 or Section 4A of the Act, as the case may be. Explanation. - The amount paid under this sub-rule shall be allowed as Cenvat credit as if it was a duty paid by the manufacturer who removes the goods. (3) If there is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assessee may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the Commissioner". Rule 16(2) hence consists of two separate situations as below: (1) when the process to which the goods are subjected before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant has cleared the said goods as scrap without paying an amount of duty equal to the CENVAT credit taken. The question that has arisen between the rival parties is whether duty for the second clearance should be made in terms of the first part of Rule 16(2) as demanded by the Revenue or as per the later part of Rule 16(2) as prayed for by the appellant. It is the appellants contention that the expression employed in the second part of Rule 16(2) is "in any other case". The said expression takes into its ambit not only a case where returned goods are subjected to a process of manufacture but also cases not covered by first part of Rule 16(2). We find from a plain reading of Rule 16(2) that if the first part of Rule 16(2) is applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails credit of the entire amount of the duty paid on rejected final products, seeks to pay the duty only on the waste and scrap, which at any stretch of imagination cannot be said to be arising out of a process of manufacture. We are of the view that the appellant cannot claim that the waste and scrap which arises from rejected goods, are due to the process of manufacture as there is no manufacture, involved in the process, as is explained by the appellant before us as well as before the lower authorities. Accordingly, we find that the impugned order, to the extent it confirms the demand is correct and legal and does not require any interference." The facts of clearance involved in the present case is also the same. Goods which were initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and they had no intention to evade payment of duty. We find that the wordings of Rule 16 of Central Excise Rules, 2002 does give room for interpretation and there has been no positive act of suppression that has been brought out on behalf of the appellant. Hence, we feel that the demand shall be limited to the normal period. 9. Having regard to the facts discussed above, we uphold the impugned order on merits. We however feel that no grounds have been made for invocation of extended time limit. Hence the imposition of penalty under sec. 11AC of the Central Excise Act, 1944 and sec. 25 of the Central Excise Rules, 2002 does not arise. Duty shall be paid for the normal period with interest if any, as per law. The appeal is disposed of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
