Cenvat credit on returned goods is admissible when taken on supplier invoices for remaking or reconditioning.

Rule 16(1) of the Central Excise Rules, 2002 permits Cenvat credit on duty-paid goods returned to the factory for remaking, refining, reconditioning or other processing, treating them as inputs under the Cenvat Credit Rules. Credit taken on the basis of a supplier's invoice under Rule 9 is valid where the department has accepted the duty payment. The objection under Rule 3(4) fails because that provision concerns removal of inputs or capital goods as such and does not override the specific entitlement under Rule 16. The statutory scheme therefore supports availment of credit on returned goods, with no revenue loss shown.

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Issues: Whether Cenvat credit was admissible on duty-paid goods returned to the factory for remaking or reconditioning when the credit was taken on the basis of the supplier's invoice, despite the Revenue's objection that the duty paid by the supplier was in excess.

Analysis: Rule 16(1) of the Central Excise Rules, 2002 permits an assessee to take Cenvat credit of the duty paid on goods brought back to the factory for being re-made, refined, re-conditioned or for any other reason, as if such goods were received as inputs under the Cenvat Credit Rules. The credit in the present case was taken on documents specified under Rule 9 of the Cenvat Credit Rules, 2002. The objection based on Rule 3(4) of the Cenvat Credit Rules, 2002 was not accepted because that provision concerns removal of inputs or capital goods as such and did not displace the specific entitlement under Rule 16. The duty paid by the supplier had been accepted by the department, and the availment of credit on the strength of the invoice was consistent with the statutory scheme and caused no revenue loss.

Conclusion: Cenvat credit on the returned goods was admissible and the Revenue's objection was not sustainable.

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