https://www.taxtmi.com/caselaws?id=122654 Returned duty-paid goods acquire the character of inputs only through the legal fiction in Rule 16 of the Central Excise Rules, 2002, and where processing on those goods is not accepted as manufacture, duty under the first part of Rule 16(2) remains payable on the resulting scrap. The demand was therefore sustained. Penalty under Section 11AC was not justified because the dispute arose from interpretation of the excise provisions and did not disclose the basis for penal action in a bona fide controversy. The penalty was therefore deleted. en-us Fri, 13 Jul 2007 00:00:00 +0530 Thu, 16 Aug 2012 13:00:15 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=122654 Returned duty-paid goods acquire the character of inputs only through the legal fiction in Rule 16 of the Central Excise Rules, 2002, and where processing on those goods is not accepted as manufacture, duty under the first part of Rule 16(2) remains payable on the resulting scrap. The demand was therefore sustained. Penalty under Section 11AC was not justified because the dispute arose from interpretation of the excise provisions and did not disclose the basis for penal action in a bona fide controversy. The penalty was therefore deleted. Case-Laws Central Excise Fri, 13 Jul 2007 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=122654