Tribunal rules in favor of Appellant, setting aside duty demand and penalty for disputed Cenvat Credit.

The Tribunal set aside the duty demand and penalty imposed on the Appellant for clearing waste & scrap generated from rejected finished goods on which Cenvat Credit was taken. The decision was based on a previous Tribunal ruling that favored the Appellant, leading to relief being granted in this case.

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Issues involved: Interpretation of Rule 16 of Central Excise Rules, 2002 regarding clearance of waste & scrap generated from rejected finished goods on which Cenvat Credit was taken.

Summary:
The Appellant, engaged in manufacturing BOPP films, received rejected final products in their factory for reprocessing after payment of duty. They availed Cenvat Credit under Rule 16 of Central Excise Rules, 2002. The rejected goods were processed, resulting in waste & scrap, which was used to manufacture Reprocessed Granules (RPG). The RPG was either used internally for duty-paid BOPP films or cleared duty-free under an exemption. The department contended that the waste & scrap, cleared on payment of duty, were made from rejected goods on which Cenvat Credit was taken. The department demanded duty payment equal to the Cenvat Credit taken on the rejected goods. No demand was raised on the initial rejected BOPP films. A duty demand of Rs. 72,244 was confirmed, with a penalty under Rule 25 of Central Excise Rules, 2002.

The Appellant argued that the issue was settled in their favor in a previous Tribunal decision (Order No.A/72/WZB/AHD/2010). The Revenue accepted this position. Following the precedent set in the earlier case, the Tribunal set aside the impugned order, allowing the appeal and granting relief to the Appellant.

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