2020 (12) TMI 696 - AT - Central Excise

Appellant wins appeal, deemed eligible for Cenvat credit on returned goods under Rule 16.

The Tribunal ruled in favor of the appellant in an appeal against the demand for irregular Cenvat credit availed under Rule 16 of Central Excise Rules, ... Recovery of CENVAT Credit - goods returned by its customers under Rule 16 of the Central Excise Rules, 2002 without proper documents - demand on the ground that the amount paid by the Appellant as excise duty was actually on trading of goods as the process of cutting, slitting and polishing on imported China pipes couldn’t be a manufacturing process - time limitation - HELD THAT:- The Appellant has produced copies of its tax invoice, credit note as well as buyer’s debit note for return of the said duty paid goods by its customers - From the same it is clear that the Appellant had sold goods after payment of excise duty to it’s customers and when the same are returned for any reason, the Appellant is entitled to Cenvat credit of the same subject to conditions of Rule 16 of the Central Excise Rules, 2002. From the plain reading of the above Rule 16, it can be seen that though under Cenvat credit Rules, Cenvat credit is allowed only on input but under special provision of Rule 16, the Cenvat credit is allowed even on the finished goods on the condition that at the time of re-issue of such finished goods, the assessee is required to pay appropriate excise duty. In the present case, there is no dispute on payment of duty on the re-issue of the goods on which credit was taken. Therefore, in terms of Rule 16, the Appellant is entitled for the credit. Te issue is no more res – integra - The Tribunal in the case of M/S. BALMER LAWRIE & CO. LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [2016 (8) TMI 1113 - CESTAT MUMBAI] has held that irrespective of fact whether the invoices are of appellant or otherwise if duty paid goods is brought in the factory of the assessee credit can be allowed. Thus, Appellant can avail the Cenvat credit of the duty paid goods and since there is no dispute in the present case that the goods were not duty paid goods. The demand for recovery of Cenvat credit fails. Further, it is also on record that the Appellant’s activities were known to the department since inception as earlier also a SCN dated 01/04/2015 was served on the Appellants for recovery of Cenvat credit availed on imported china pipes which were cleared after payment of duty. Time Limitation - HELD THAT:- The current proceedings being on the same foot by treating amount paid by the Appellant as not excise duty, cannot be sustained by invoking extended period of limitation as the department was very much having knowledge of the entire proceedings since inception. Thus, the demand cannot sustain on limitation ground as well. Appeal allowed - decided in favor of appellant. Issues:Appeal against demand of irregular Cenvat credit availed under Rule 16 of Central Excise Rules, 2002 during 2013-14 and 2014-15.Analysis:1. Facts of the Case: The appellant, engaged in the manufacture of stainless steel products, faced a demand for irregular Cenvat credit availed on goods returned by customers under Rule 16 of Central Excise Rules, 2002.2. Allegations and Proceedings: The department alleged that the appellant availed Cenvat credit without proper documents and on goods not qualifying as duty paid. The lower authorities confirmed the demand and imposed penalties, leading to the appeal.3. Appellant's Contentions: The appellant argued that the goods were duty paid, making them eligible for Cenvat credit under Rule 16. They cited previous proceedings where Cenvat credit on similar goods was reversed and paid, supporting their claim for credit on returned goods.4. Legal Precedents: The appellant relied on legal precedents like BALMER LAWRIE & CO. LTD. case to support their claim that their own invoice is a valid document for availing Cenvat credit.5. Extended Period of Limitation: The appellant contested the invocation of an extended period of limitation, stating that the department was aware of their activities since a previous SCN in 2015, making the current proceedings unjustified.6. Judgment: The Tribunal analyzed Rule 16 of Central Excise Rules, 2002, allowing Cenvat credit on duty paid goods returned by customers. Referring to legal precedents, the Tribunal ruled in favor of the appellant, stating that the goods were duty paid, entitling them to the credit. The demand for recovery of Cenvat credit was deemed unsustainable, and the invocation of an extended period of limitation was rejected due to the department's prior knowledge of the appellant's activities.7. Conclusion: The appeal was allowed, granting the appellant relief and benefits, with the judgment delivered on December 17, 2020.