Cenvat credit on dies for transfer and repair upheld where duty was paid and reversed credit could not be demanded again.

Cenvat credit on dies transferred to Unit-II was treated as admissible because duty had been paid at the time of transfer, and the recipient's entitlement could not be denied by reopening the supplier's assessment at the recipient's end; the Section 11D demand was therefore unsustainable. Credit on dies moved from Unit-II to Unit-I for repair was also protected, as Rule 16 of the Central Excise Rules, 2002 permits removal and return of goods for repair or similar processes, and the fact that the goods were not capital goods for Unit-I did not by itself justify denial. Once the credit had already been reversed on return, a second demand for the same credit was impermissible.

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Issues: (i) Whether Cenvat credit was admissible to Unit-II on dies transferred by Tata Motors after payment of duty, and whether the amount could be demanded from Tata Motors under Section 11D of the Central Excise Act, 1944. (ii) Whether credit availed on dies transferred from Unit-II to Unit-I for repair could be denied on the ground that the goods were not capital goods for Unit-I, and whether the credit could be demanded again after reversal on return of the goods.

Issue (i): Whether Cenvat credit was admissible to Unit-II on dies transferred by Tata Motors after payment of duty, and whether the amount could be demanded from Tata Motors under Section 11D of the Central Excise Act, 1944.

Analysis: The dies were imported by Tata Motors under EPCG without payment of duty, but duty was in fact paid at the time of transfer to Unit-II and was taken as credit by Unit-II. The recipient's entitlement to credit depends on duty having been paid, and the correctness of the supplier's assessment cannot be reopened at the recipient's end. On that basis, the payment could not be treated as inadmissible credit in the hands of Unit-II, and the demand under Section 11D was also unsustainable.

Conclusion: Credit to Unit-II was admissible and the demand under Section 11D was not sustainable.

Issue (ii): Whether credit availed on dies transferred from Unit-II to Unit-I for repair could be denied on the ground that the goods were not capital goods for Unit-I, and whether the credit could be demanded again after reversal on return of the goods.

Analysis: The dies had been transferred on payment of duty for repair and were returned after repairs. Rule 16 of the Central Excise Rules, 2002 permits return of goods for repair, remaking and similar processes. The fact that the goods were not capital goods for Unit-I did not by itself justify denial of credit. Further, since the credit had already been reversed when the goods were returned, a fresh demand for repayment of the same credit was impermissible.

Conclusion: The credit could not be denied on that ground and no second demand for the same credit could be raised after reversal.

Final Conclusion: Both impugned orders were set aside and all the appeals were allowed, granting complete relief to the appellants.

Ratio Decidendi: Credit cannot be denied to the recipient when duty has been paid by the supplier, the supplier's assessment cannot be reopened at the recipient's end, and credit already reversed cannot be demanded again merely because the underlying goods were sent for repair and returned.

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