TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 1493
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....is same in all these appeals they are taken up together for disposal. 2. The appellants are engaged in the manufacture of motor vehicles liable to Central Excise duty. They clear these vehicles on payment of duty for sale through their dealers. There are instances of damage to these vehicles in transit. When the damage is minor, repairs are carried out by the dealers before the vehicle is sold. If the damage is beyond any repair work that can be done at the dealer's end. Such vehicles are received back into the factory of appellant for being re-made/repair. Number of such vehicles is less than 0.5% of the total clearance by the appellant. 3. Prior to July 2001 the appellants were following procedure under Rule 173H/173L of the erstwhi....
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....ipt of such duty paid goods should be for being remade, refined, re-conditioned or for any other reason. In their case, admittedly, they are receiving back duty paid vehicles which are damaged and the purpose is to remake them into a saleable vehicle. These are not disputed facts; (b) The learned Commissioner in the first order dated 31/03/2007 concluded that the appellants are eligible for credit proportionate to the salvaged parts which were used for further manufacturing. He denied credit attributable to completely damage portion/parts of the vehicle which were not salvaged, but were scrapped. The learned Counsel submitted that such conclusion is beyond any legal provision and it is totally untenable; (c) The learned Commissioner'....
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....r plea on time bar. 5. The learned AR Shri G.R. Singh reiterated the findings of the lower authorities. He submitted that the totally damaged vehicles cannot be considered as input for the purpose of availing credit of duty. The damaged vehicle cannot be utilized in full as input in the further manufacture of a new vehicle. As such, he pleaded that the credit availed on such vehicles cannot be allowed as they are to be considered as scrap only. 6. We have heard both the sides and examined appeal records. The short point for decision is the eligibility of the appellant for the credit of duty paid on the vehicles at the time of their initial clearance which were later brought back to the factory due to damage. The scope and applicability of....
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....of clearance of vehicle. Due to damage in transit, the said duty paid vehicle is brought back to the factory for being re-made or salvaged to the extent possible. We find that the case of the appellant is clearly covered by the provisions of Rule 16 (1). The said rule permits Cenvat credit of the duty paid as if such goods are received as inputs under the Cenvat Credit Rules, 2002 and to utilize this credit according to the said rules. Clearly a legal fiction has been created in this rule. In normal course duty paid motor vehicle cannot be an input for making same type of motor vehicle. Here the said vehicle is deemed to have been input only because it is brought into the factory for being re-made, refined, re-conditioned or for any other r....
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....cess of dismantling, identifying and retrieving usable parts/ components from the damaged vehicle is the first step in the process of using the damaged vehicle in further manufacture. As already explained and held by the Tribunal the process undertaken by the appellant is not simple repair but amounts to manufacture of new motor vehicle. The dismantling/salvaging is part and parcel of such manufacturing process. In view of this, we find that credit of duty paid at the time of initial clearance is available in full to the appellants. Apportioning the credit for salvaged and usable parts and non-usable scrap is not having support of any provision of law. Further, it should be noted that while the usable salvaged items were put into manufactur....