Cenvat credit on duty-paid biscuits repacked for export remained admissible under Rule 16 despite no manufacturing process.

Rule 16 of the Central Excise Rules, 2002 permits Cenvat credit on duty-paid goods brought into a factory for reworking or for any other reason, and Rule 16(2) addresses both cases where the subsequent process amounts to manufacture and where it does not. On that basis, duty-paid finished biscuits received in the factory, repacked to meet export requirements, and cleared for export after payment of the applicable excise duty were eligible for credit. Credit could not be denied merely because the goods were not subjected to a manufacturing process or because the activity did not match the specific processes named in the rule. The denial of Cenvat credit was therefore unsustainable.

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Issues: Whether Cenvat credit was admissible on duty-paid finished biscuits received in the factory and repacked for export under Rule 16 of the Central Excise Rules, 2002.

Analysis: Rule 16(1) permits an assessee to take Cenvat credit on duty-paid goods brought into the factory for being re-made, refined, re-conditioned or for any other reason, and to utilise that credit under the Cenvat scheme. Rule 16(2) further contemplates both situations where the subsequent process amounts to manufacture and where it does not, in each case permitting the credit mechanism subject to the prescribed duty or valuation consequences. The goods in question were received duty paid, repacked to meet export requirements, and cleared on export after discharge of the applicable excise duty. In these circumstances, the credit could not be denied merely because the goods were not subjected to a manufacturing process or because the assessee had not undertaken the specific processes expressly named in the rule.

Conclusion: Cenvat credit was rightly availed and the denial of credit was unsustainable.

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