TaxTMI 
TaxTMI 
2023 (9) TMI 518
X X X X Extracts X X X X
X X X X Extracts X X X X
....llants are engaged in the manufacture of metal containers (drums and barrels) falling under Chapter 73 of the Schedule to the CETA, 1985. On perusal of their CENVAT invoices relating to the rejections, it appeared that the appellant had availed credit on all rejected and returned metal containers (final products) received in their factory under the provisions of Rule 16 of the Central Excise Rules, 2002. But it appeared that they had not observed the procedure laid down in sub-rule (2) of Rule 16 of the Central Excise Rules, 2002 for paying duty equivalent to the CENVAT credit taken at the time of subsequent clearance. On pointing out the same, the appellant debited the excess credit availed amounting to Rs.2,20,756/- but did not pay the in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s at all before they were cleared from the factory. Their case is covered by the situation 'any other case' of Rule 16(2) whereby they are required to pay duty on goods received 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 4 or Section 4A of the Act, as the case may be. Further, there was no intention on their part to evade payment of duty as they had followed the procedure as per the Rules. Hence they were not liable to pay any interest and penalty. He prayed that the impugned order may be set aside and the appeal allowed. 6. Shri Rudra Pratap Singh, learned Additional Commissioner (AR) appeared on behalf of the Revenue. He stated that as per sub-rule ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase the manufacturer shall pay duty on goods received 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 4 or Section 4A of the Act, as the case may be. Explanation. - The amount paid under this sub-rule shall be allowed as Cenvat credit as if it was a duty paid by the manufacturer who removes the goods. (3) If there is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assessee may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the Commissioner". Rule 16(2) hence consists of two separate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k in the appellants factory have not undergone any process of manufacture. The dispute has arisen when the appellant has cleared the said goods as scrap without paying an amount of duty equal to the CENVAT credit taken. The question that has arisen between the rival parties is whether duty for the second clearance should be made in terms of the first part of Rule 16(2) as demanded by the Revenue or as per the later part of Rule 16(2) as prayed for by the appellant. It is the appellants contention that the expression employed in the second part of Rule 16(2) is "in any other case". The said expression takes into its ambit not only a case where returned goods are subjected to a process of manufacture but also cases not covered by first part o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 does ....