Cenvat credit on returned duty-paid goods was allowed where records showed receipt, reprocessing and duty-paid clearance under Rule 16.

Cenvat credit was admissible on duty-paid finished goods returned by purchasers for remaking, refining or reconditioning where the returned goods were supported by duty-paying documents and the assessee's records showed receipt, reprocessing and subsequent clearance on payment of duty. The statutory conditions under Rule 16 were therefore satisfied, and denial of credit on the ground of alleged improper accounting was not justified. The assessee was entitled to the credit claimed, and the order denying the benefit was unsustainable.

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Issues: Whether Cenvat credit was admissible on duty-paid finished goods returned by purchasers for remaking, refining or reconditioning, and whether the assessee's records were sufficient to establish compliance with Rule 16.

Analysis: The returned goods were accompanied by duty-paying documents, the assessee accounted for receipt and subsequent clearance of the reprocessed goods in its records, and the materials on record showed that the goods were received back, reconditioned and cleared on payment of appropriate duty. In these circumstances, the statutory conditions for taking credit on returned goods were satisfied, and the denial of credit on the ground of alleged improper accounting was not justified.

Conclusion: The assessee was entitled to the credit claimed, and the order denying the benefit was unsustainable.

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