No liability arises under Rule 16 if no credit was taken on receipt of defective goods.

PJ/CASE LAW/2015-16/2611

Case:- BHANDARY METALLURGICAL CORPN. LTD. VERSUS COMMR. OF C. EX., MUMBAI-II

Citation:- 2014 (310) E.L.T. 599 (Tri.-Mumbai)

Brief Facts:-The brief facts of the case are that the appellant received duty paid goods in their factory for carrying repair, reconditioning, remaking. While clearing the goods after doing the said process, the appellant did not pay duty. It is the allegation against the appellant by the revenue that as per Rule 16 of the Central Excise Rules, after carrying out the repair work, appellant is required to pay appropriate duty or pay duty equivalent to the CENVAT credit taken. Therefore, impugned proceedings were initiated and impugned demands were confirmed.

Appellant’s Contentions:-None appeared on behalf of the appellant nor any request for adjournment is received. As this appeal pertains to the year 2004, being an old matter, appeal is taken up for final disposal.

Respondent’s Contentions:-The ld. AR submits that as the appellant has cleared these goods without payment of duty and they have not stated what process they have taken, therefore, they are required to pay duty as per Rule 16 of the Central Excise Rules, 2002.

Reasoning of Judgment:-On perusal of the records, the tribunal find that the statement of the General Manager of the appellant is on record who stated that the appellant has undertaken the process of annealing, drawing, and pickling, which also does not amount to manufacture. It is also stated by the appellant that they have not taken the CENVAT credit on these goods when they received for repair. In these circumstances, they are not required to pay any duty or required to reverse the credit taken, as they have not taken Cenvat credit. These facts are on record and not rebutted by the revenue. Mere presumption that goods received for repair has been replaced by another goods without evidence on record is not acceptable. !n these circumstances, the statement recorded by the department during the course of investigation is reliable. Therefore, as the appellant has not taken Cenvat credit on the goods received from repair, they are not required to pay duty at the time of clearance after repair.

Appeal is allowed with consequential relief and the impugned order is set aside.

Decision:-Appeal allowed.

Comment:- The essence of the case is that when goods are received in the factory for conducting repairing process which does not amount to manufacture and the CENVAT credit is also not taken by the assessee at the time of receipt of goods, then the assessee is not required to pay any duty or reverse the credit taken as they have not taken cenvat credit on receipt of goods.

Prepared By:- Neelam Jain

Comments

PJ/CASE LAW/2015-16/2611

Post a Comment

Query