2014 (11) TMI 330

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....3. The brief facts of the case are that the appellant is a manufacturer of automobile components for two, three and four wheelers and is registered with Central Excise department under the Central Excise Act, 1944. The appellant availed CENVAT credit paid on inputs, input services and capital goods. During the manufacturing process, some inputs get rejected due to deviations, etc. On receipt of the goods in stock, the defective inputs are segregated and returned to the suppliers of the inputs, but some inputs which have been issued for processing are rejecting in machining process during the course of manufacture. Such rejected inputs in the course of manufacture, are kept separately, and for the purpose of valuation are valued at a lower r....

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...., 2000. By Order-in-original dated 3.10.2012, the show-cause notice was adjudicated confirming the proposed demand of Rs. 1,82,750/- with interest and also penalty was imposed under Rule 15 of CENVAT Credit Rules, 2004. Being aggrieved, the appellant had carried the matter before the Commissioner (Appeals) who vide the impugned order dated 13.06.2013 was pleased to reject the appeal, observing that, since the impugned goods (on such rejection) cannot be used in the manufacture of final products, the same cannot be considered as inputs under rule 3(5B) of CENVAT Credit Rules. 4. Being aggrieved the appellant have filed the present appeal before this Tribunal on the ground that it is not a case of rejection of input as such. Further, the inp....

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....manufacture, such goods cannot be treated as inputs. 6. Having considered the rival contentions, I find it is necessary to take notice of the provision of rule 3(5B), which reads, for ready reference:- Rule 3(5B) as amended by Notification no. 16/2009 -     "(5B) If the value of any,     (i) input, or     (ii) capital goods before being put to use, on which CENVAT credit has been taken is written off fully or where any provision to write off fully has been made in the books of account, then the manufacturer or service provider, as the case may be, shall pay an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods:     Provided that if the ....