TaxTMI 
TaxTMI 
2026 (6) TMI 315
X X X X Extracts X X X X
X X X X Extracts X X X X
....oner (Appeals), is assailed before this Tribunal by the unsuccessful assessee-appellant. 2. Factual background of this case is that the appellant-manufacturer had cleared one screen printing machine to M/s. Yogi Display Arts Pvt. Ltd. (YDA) under invoices dated 15.07.2004 and dated 18.07.2015 on payment of central excise duty of Rs.23,40,974/- but due to certain technical problem, as the machine could not function properly, it was returned back with the original invoices to the appellant and the appellant took credit for the entire duty paid under the provisions of Rule 16 of the Central Excise Rules, 2002 read with Cenvat Credit Rules, 2004. By using components of the returned machine, the appellant manufactured a smaller size machine a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... used in the manufacture of new machine and confirmed denial of the credit on this ground also. He further submitted that the use of the words in the CBEC circular F.No. 354/66/2001-TRU dated 21.06.2001 explains that the goods must be 'eventually returned' is to be applicable to the availment of cenvat credit under Rule 16(1) of the Central Excise Rules alone, but the appellant's case is squarely covered under Rule 16(2) of the said Rules, as being a manufacturer it had manufactured another machine of less dimension and size with the old machine components and, therefore, it was entitled to avail the said credit and there is nothing available in the Rule to suggest that it has to be returned back to the same buyer, who earlier had purchased....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rationality of the order passed by the Commissioner (Appeals) and argued that in violation of circular F.No. 354/66/2001-TRU dated 21.06.2001 that prompts the appellant to inform the department that the credit was taken upon return of goods, appellant had taken the credit. Further, with reference to the decision of the Tribunal in the case of Menon Piston Rings Pvt. Ltd. vs. Commissioner of Central Excise, Pune-II as reported in 2007 (211) ELT 394 (Tri.-Mumbai), that has been upheld by Hon'ble Bombay High Court on 10.07.2008, he argued that such non-disclosure to the department upon taking of credit after receipt of goods would amount to suppression and that it was also decided by this Tribunal in the case of Kalyani Forge Limited vs. Comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o which the goods are subjected before returning does not amount to manufacture the manufacturer shall pay an amount equal to the CENVAT credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on goods returned 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 section 4 or section 4A of the Act, as the case may be." 5.1 In compliance to the above provisions, the appellant had admittedly taken cenvat credit of the entire duty paid upon return of the manufactured machine to the factory for being remade, reconditioned or remanufactured, which may also cover under "any other reason". Had it been a case of not amounting to manufactur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arily to the same sender. Moreover, neither the said Circular nor the Rule has specifically made for reference to the fact that re make or re-conditioning as mentioned in Rule 16(1) would mean that the goods (machine) would be of the same shape and size, but what should be inferred that it would be necessarily not a different variety of machine or goods from the variety of its use and application as of the previous one. Therefore, the credit availed by the appellant was rightly admissible. 7. At this juncture, it is required to be placed on record that it is an admitted fact that not the entire components of the machine were used to manufacture the new machine as the rest of the unused components were being sold as scrap upon payme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w cause notice but completely changes the stand taken by the department and hence not acceptable to be a proper legal analogy. 8. Last but not the least, though reliance has been placed on the said circular No.354/66/2001-TRU by learned AR that it was a mandatory requirement that the assesse should have informed the department when credit was taken upon return of goods but, going by para 5 and in acceptance of the submissions made by learned counsel for the appellant, it can very well be concluded that if the goods have been removed at the time of return with original invoice, such a requirement is not at all contemplated since as an example, it has been clearly referred in the said para that in situation when goods have been removed ori....