2000 (6) TMI 237

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....he matter was called despite notice. 3. The Tribunal had by the impugned Final Order upheld the Order-in-Appeal passed by the Commissioner (Appeals) holding that modvat credit will be available on finished goods returned to the manufacturer of finished goods by the customer by reason of the goods being defective. STATEMENT OF CASE 4. Ld. JDR has argued that in the instant case the Respondents who were manufacturers of C.R. Coils/sheets and G.P. Coils/sheets received their inputs from various suppliers and they had been taking modvat credit on the duty paid on the inputs. Some of the purchasers of their finished products returned the goods to them as the goods were defective. Respondents thereupon took credit on the defective go....

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....led seat kushy returned to the manufacturer by the buyer. Likewise, in the case of ASSK Engineers v. CCE [1998 (97) E.L.T. 99 Mumbai CEGAT)], the Tribunal had taken the view that where the operation undertaken on the returned goods in the appellant's factory was only removal of defects, which did not amount to manufacture, the Department would be justified in disallowing modvat credit. A two Member Bench of the Tribunal had in Escorts Ltd. v. CCE [1993 (68) E.L.T. 682] held that in the case of rejected or defective goods brought back to the manufacturer's unit for re-conditioning and repairs would not be eligible for modvat credit since no manufacturing activity was involved. Having regard to the decisions in the aforesaid orders of the Tri....