TaxTMI 
TaxTMI 
2007 (6) TMI 35
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....specification given by the customers. The appellants cleared the said Aluminium Foils on payment of appropriate duties to their customers. The customers of the appellant rejected few consignments for being off-specification. These goods are brought back by the appellant into the factory under the provisions of Rule 16 of Central Excise Rules, 2002. After the inspection of such rejected goods, appellant cleared those goods, which conformed to the specification of customers on payment of duty and cleared the balance as waste and scrap. The appellant availed Cenvat credit as per provisions of Rule 16 of Central Excise Rules, 2002 when they received the goods back from their customers and while clearing the goods second time to their customers ....
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....goods when initially took place were not of marketable goods and no duty was payable. The scrapping of finished goods received back from the customers end are duty paid and .hence the credit availed by them would be correct. It was submitted that, since duty was not payable on non-marketable goods the availment credit on refinished goods is within the law. He relies upon the decisions of the Tribunal in the case of DSM Anti-Infective India (P) Ltd. v. Commissioner of Central Excise, Chandigarh as reported in 2004 (165) E.L.T. 69 (Tri.-Del.) for the proposition that if the goods at customers end found to defective, meaning thereby that the product in question was not marketable and if it is so no duty is payable. The ld. SDR reiterates the f....
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....yment of duty, the question of them being marketable or non marketable does not arise as duty is to be discharged all the goods on removal from the factory premises. Once such duty is paid on removal of the goods, the provisions of Central Excise Rules as regard the payment of duty are satisfied and in case, the duty paid goods are to be brought back for remaking, refining, reconditioning or for any other reason, it would be covered by Rule 16 of the Central Excise Rules, 2002. It would be relevant to read the said Rule :- "Rule 16. Credit of duty on goods brought to the factory. - (1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for re-made, refined, re-conditioned or for any othe....
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....han the amount of credit availed under Sub-Rule 16(1) has to be reversed. In the case before us, it is seen that the appellant avails credit of the entire amount of the duty paid on rejected final products, seeks to pay the duty only on the waste and scrap, which, at any stretch of imagination cannot be said to be arising out of a process of manufacture. We are of the view that the appellant cannot claim that the waste and scrap which arises from rejected goods, are due to the process of manufacture as there is no manufacture, involved in the process, as is explained by the appellant before us as well as before the lower authorities. Accordingly, we find that the impugned order, to the extent it confirms the demand is correct and legal and ....