TaxTMI 
TaxTMI 
2011 (4) TMI 984
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....eived back 2616 rejected LDPE cap covers valued at Rs. 1,18,27,985/- involving duty of Rs. 18,92,478/- from their branch offices. Those goods were manufactured by the appellants. The process of the manufacture involved joining of ends of bought out LDPE film received from M/s. Essen Multipack Ltd., Rajkot by heat and press treatment and fixing of eyelets. At the time of receipt of the film, Cenvat credit on those LDPE film was availed by the appellants. The appellants cleared those goods after manufacture and each piece weighing approximately 61 kgs. was cleared originally at the rate of Rs. 5949/- and accordingly, duty was paid. Some of those goods were received back without any cenvatable document issued by the branch offices under cover of challans issued by those branches. The appellants on receipt of the said goods removed the top cover/portion of the LDPE cap covers and replaced LDPE film therein with newly bought out LDPE film procured from the manufacturer of LDPE film. The said film for the purpose of replacement was purchased by the appellants on payment of duty and the cenvat credit in respect thereof was also availed. After repairing the LDPE cap cover, the goods were a....
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.... inputs utilised in repairs of the rejected goods which were cleared at the same price. Drawing our attention to Rule 16 of Central Excise Rules, 2002, learned Advocate for the appellants submitted that the authorities below erred in applying the provisions of sub-rule (2) of Rule 16 when, in fact, the authority ought to have applied the provisions of sub-rule (1). On the other hand, the DR submitted that no fault can be found with the finding arrived at by the authority below in relation to the obligation of the appellants while availing Cenvat credit. 8. Learned Advocate for the appellants also submitted that the Tribunal in the appellant's own case under order dated 28-3-2008 has clearly held that in the absence of material showing any positive intention on the part of the appellants which is a Government undertaking, to evade duty or unless there is a case of fraud, collusion etc., imposition of penalty is not justified and considering the same, there cannot be any justification for imposition of any penalty. The DR on the other hand, placing reliance in the matter of Union of India v. Dharamendra Textile Processors reported in 2008 (231) E.L.T. 3 (S.C.) and Union of In....
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....m on the ground that it was a repair work and the same job for subsequent period cannot be termed as manufacture in terms of sub-rule (2) of Rule 16, if the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the pay duty on cenvat credit taken and in any other cases he is required on the date of removal. In this case, the noticee has already paid the duty which was equivalent to the amount of credit availed by them, but this does not entitle them to avail credit on the inputs used. In repair of the goods which does not tantamount to manufacture as per their own stand. Thus, they were not eligible to avail credit of Rs. 8,57,094/- which is recoverable from them under the provisions of Rule 12 of Cenvat Credit Rules, 2001 read with Section 11A of the Act by invoking extended period of limitation. The noticee had never declared/intimated the department that the said inputs were used for repair of rejected goods and there was a specific allegation in this regard in the show cause notice which was never contested". 13. Plain reading of the order of the adjudicating authority and earlier orde....
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...., Rule 16(1) which is confined to the activity "remaking, refining, reconditioning". It also use an expression "for any other reason". However, the same has to be read without forgetting principle of ejurteim generis. 16. As far as sub-rule (2) of Rule 16 is concerned, it covers all the situations to which sub-rule (1) is not applicable. It provides that if the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the cenvat credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on goods received under sub-rule (1) at the rate applicable on the date of removal and on the value determined under sub­section (2) of Section 3 or Section 4 or Section 4A of the Act, as the case may be. In other words, even though manufacturer on return of the goods seeks to avail of cenvat credit, he will have to pay the amount equal to such credit in case a process under which the returned product undergoes does not amount to manufacture. In the case in hand, admittedly, returned goods did not undergo any process of manufacture. Being so, there cannot be any dispute that the p....