GOODS RETURNED

[SURYAKANT MITHBAVKAR]

We are manufacturing Pharmaceuticals machinery registered under Central Excise Act.

We have received machine returned from our customer. The same machine earlier supplied by us in the year 2003.The customer has issued us transfer invoice showing removal of Capital Goods as it is under Rule 3 Sub Rule "5" and reversed credit as per Not. No. 39/2007-CE(NT) Dated 13.11.07.

In view of the above please clarify the following point.

Since the machine is too old we are not able to do rework in the same machine and to sell the other customer. Can we dismentle and used the same parts to manufacturing our other machine wherein not possible to produce identification of parts used in different machine to the department. In short we will take credit as our input.

Pl. advice.

AI Summary

Cenvat credit entitlement depends on whether processing returned goods constitutes remanufacture or mere reuse of old parts.
Manufacturer proposes dismantling an old returned capital machine and using salvaged parts as inputs claiming cenvat credit. Advisers contended cenvat is not available where the machine is not returned after repair and only a few old used parts are reused. A tribunal ruling, by contrast, allowed cenvat where returned duty-paid goods were dismantled and remade using salvaged and fresh parts on the same production line, holding entitlement depends on whether the process amounts to manufacture/remanufacture under the Central Excise Rules.