2015 (10) TMI 2201

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....eal is admissibility of cenvat credit taken by the appellant with respect to rejected goods manufactured by the appellant which were received on rejection. 2. Shri Vinay Sejpal, (Advocate) appearing on behalf of the appellant argued that appellant is manufacturing Re-enforced Poly-Propylene Plastic Granules and clearing on payment of duty.  That in certain cases the goods manufactured and cleared by the appellant on payment of duty are received back as rejected which are separately shown in the cenvat credit account and credit is taken by maintaining separate Section in the CENVAT credit account.  That these rejected goods received are again used for manufacture of PP Co-Polymer granules for which necessary issue slips are main....

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....also relied upon the CBEC Circular No. 15/88-CX.3 dated 10.08.1988 where it is clarified that conversion of LDPE/HDPE moulding powder (granules) into Moulding powder (powder form) would amount to manufacture in the light of note 6 of Chapter 39 of the Schedule to Central Excise Tariff Act, 1985. 3. Shri Govind Jha (AR) appearing on behalf of the Revenue argued that it has not been established that process undertaken by the appellant amounts to manufacture, therefore, appellant was required to reverse the cenvat credit taken at the time of receipt of the rejected goods.  Learned AR therefore, strongly defended the order passed by the first appellate authority. 4. Heard both sides and perused the case records.  It is observed ....

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....e documents relied upon by the appellant were fabricated after the date of audit. 5. So far as the issue whether conversion of granules again into PP Granules by adding certain additives amounts to manufacture or not, though this was not the issue in the show cause notice but appellant has relied upon the case law of Snakhla Industries Unit-III vs. CCE, Bangalore III  (supra).  Para 2 of this case law is relied upon and is reproduced below:- 2. After examining the records and hearing both sides, I find that it is not in dispute that the goods returned by the assessees buyers were remelted by making use of the same machinery and fresh products viz. PVC compound, PVC Master Batch, etc., emerged. It is also not in dispute that ....