<h1>Credit on returned goods: procedural compliance required and reversal or duty payment depends on whether reprocessing amounts to manufacture.</h1> Rule 16 permits cenvat credit on duty paid goods returned to factory for re making, reconditioning or repair subject to Cenvat Credit Rules; where processes do not amount to manufacture credit must be reversed, while processes amounting to manufacture attract normal excise duty. Sub rule (3) allows the commissioner to specify conditions when difficulty arises. Penalty under Rule 25(1)(d) for contravention requires proof of intention to evade duty; absent mens rea, penal action is doubtful. Procedural compliance and evidence linking returned and re cleared goods are central to preventing clandestine removals.