TaxTMI 
TaxTMI 
2014 (1) TMI 5
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....he Central Excise Department and challans/bills/invoices did not indicate duty paying particulars. Therefore, the department felt that the appellants were not entitled to cenvat credit on challans/bills/ invoices as these documents did not belong to category of documents specified under Rule 7 of Cenvat Credit Rules. Accordingly, three show cause notices for different periods were issued to the appellants demanding the credit along with interest and also proposing imposition of penalty on them. Three show cause notices were adjudicated by the Additional Commissioner on 19.3.2004 who confirmed the demand of duty amounting to Rs. 46,51,067/- along with interest and also imposed penalty of Rs. 15 lakhs on them under Rule 13 of Cenvat Credit Rules. The appellants challenged the order of Original Authority before the Commissioner (Appeals) who vide the impugned order has rejected their appeal. The appellants are in appeal before this Tribunal against the order passed by the Commissioner. 2. The learned Advocate appearing for the appellants submits that they had correctly availed the cenvat credit on damaged finished goods as provided under Rule 16 of the Central Excise Rules. He subm....
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....ules reads as under: " RULE 16 Credit of duty on goods returned to the factory. (1) Where any goods on which duty has been paid at the time of removal thereof are subsequently returned to the factory for being remade, refined, re-conditioned or for any other reason, the assesse shall state the particulars of such return in his records and shall been tiled to have CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2001 and utilize this credit according to the said rules. [(2) If the process to which the goods are subjected before returning 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 returned under sub-rule (1) at the rate applicable on the date of removal and on the value determined under sub-section (2) of section 3 or section 4 or section 4A of the Act, as the case may be.] (3) If there is any difficulty in following the provisions of sub-rule (1) and sub-rule (20, the assessee may receive the goods for being remade, refined re-co....
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.... situated in villages in various parts of the country. During transit, finished goods get damaged or the same may get damaged at their depots or outer packing of the finished goods become unsuitable for marketing, the same are sent back by their sales depots to their factory for the purpose of remade etc under the cover of stock transfer invoices/challans/bills. The documents issued by the sale depots contain the following particulars: (a) Description of the goods. (b) Original Invoice Number and Date under cover of which the said goods were cleared from the factory. (c) Quantity of damaged goods returned i.e. the number of packs returned and the quantity in each pack. (d) The rate per pack of damaged goods and the total amount. 9. On receipt back of the goods, the appellants availed the Cenvat credit of duty originally paid by them at the time of clearance of goods. The necessary entries are made in the register as regards the returned goods and the same are then reproduced and cleared again on payment of duty. 10. In the above background appellants were issued 3 show cause notices proposing denial of Cenvat cre....
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.... to 31.3.2003, the party had availed CENVAT credit amounting to Rs.34 ,94,757 /- on the returned goods by their sales depots as per details given in the Annexure-I to this show cause notice. From the above, it appears that M/s. Dhanuka Pesticides Ltd. have contravened the provisions of Rule 7 of CENVAT Credit Rules 2002 in as much as that they have availed CENVAT credit on the basis of documents not prescribed under the rules. Thus, it appears that the CENVAT credit amounting to Rs. 34,94,757/- is recoverable from the party and that acts of commission and omission narrated above have rendered the party liable to penalty in terms of provisions of Rule 13 of the CENVAT Credit Rules." 12. As is seen from the above notice, the Revenue proposed to deny the credit on the sole ground that the delivery challans issued by the sales depots are not prescribed documents under Rule 7 and as such, the credit availed by the appellant was not proper. However, while adjudicating, lower authorities have drifted from the said allegation and has extended the scope of proceeding by introducing another allegation that the goods received back from the sales depots cannot be correlated ....
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....f returned goods, I have carefully examined the provisions of Rule 16 as also various trade notices issued by the Commissionerate. On going through the provisions of Rule 16, I find that the same allows Cenvat credit of duty originally paid, as and when such cleared goods are subsequently returned. There is no requirement in terms of said Rule to establish the identity of the returned goods and to co-relate the same with the originally cleared goods with reference to any identification marks etc. The said Rule has been subject matter of various circulars/trade notices etc. issued by the Revenue from time to time. Mysore Commissionerate Trade Notice No.21/2004 dated 11.5.04 lays down the procedure under Rule 16, which is required to be followed by the manufacturer. It stands observed in the said trade notice that the assessee receiving the duty paid goods may avail Cenvat credit based on the documents under which the goods were returned or on ones own office copy of document under which the goods were originally cleared. It is only on receipt of goods without accompanying the duty paying documents that the assessee is required to identify the goods from marks, numbers etc. based on ....
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.... and clarifications. As long as goods are received back under the cover of duty paying documents, which are easily co-relatable to the received back goods, no further insistence on identification marks is required. The goods in the present case are insecticides and pesticides, which do not carry any such manufacturing number or any other identification marks. The same are packed in units of 5 or multiples thereof. It is not necessary that the entire packing cleared by the appellant would get damage and it may happen in certain cases that part of the certain goods gets damage. In such a scenario, only a part of the goods are returned back to the appellant. Insistence on the fact that entire goods in the original packing should go back, would defeat the very purpose of Rule 16. In my views the said Rule 16 would become otiose in respect of number of goods manufacturer inasmuch as most of the goods do not carry any identification marks on them. Inasmuch as in the present case it is the chemicals which do not carry any marks etc. the same can be identifiable with the original clearance only on the basis of original duty paying documents and the Revenue's insistence on the identificatio....