Whether credit can be taken on the standby transformer received back which was initially cleared on payment of duty?

PJ/Case Law/2014-15/2189

Case:- RAMKRISHNA ELECTRICALS LTD Vs CCE, NAGPUR

Citation:- 2014-TIOL-653-CESTAT-MUM

Brief facts:- The applicant was seeking waiver of pre-deposit of the input credit availed on returned transformers by the applicants.
The brief facts of the case were that the applicants were manufacturers of transformer and clearing the same on payment of duty. Sometimes, the transformers which were supplied to the customer were returned back for repairs. In that situation, the applicant was providing the standby transformer for the period of repair of the transformer sold to the customer. The transformer which was sent for a short period were cleared on payment of duty and after the repair, the transformer was cleared, the standby transformer comes back to the factory and on which the applicants were taking credit of the duty paid on the same. Revenue was of the view that the applicant was not entitled to take credit on the said standby transformer returned back as same was not input and the credit could not been taken on the strength of the own invoice which was not a proper document to take CENVAT credit.

Appellant’s contentions:- The ld. Counsel for the applicant submitted that as per Rule 16 of CENVAT Credit Rules, 2002, (sic) the applicant was entitled to take credit of finished goods and there was no provision in rule 16 stating that on which document credit could be taken. To support this contention, he relied on the decision in Supreme Industries Ltd. 2005 (189) ELT 453 which was followed by the Tribunal in Bunty Foods (India) Pvt. Ltd. 2009 (240) ELT 306 - 2008-TIOL-516-CESTAT-MUM.

Respondent’s contentions:-

Reasons of judgment:- Considering the submissions made by the applicant and relying on the above cited judgment, the applicant had made out a case for 100% waiver of pre-deposit. Accordingly, the Hon’ble judge waived the pre-deposit of entire amount of duty, interest and penalty and stay recovery thereof during the pendency of the appeal.

Decision:- Stay was granted.

Comment:- Rule 16(1) states that where on any goods on which duty had been paid at the time of removal there of are brought to any factory for being Remade, Refined, Reconditioned or for any other reason, the assessee shall state the particulars of such receipts in his records and shall be entitled to take the cenvat credit of the duty paid as if such goods are received as inputs under the cenvat credit rules 2002 and utilize this credit according to the said rules. Thus the use of phrase “or for any other reason” makes the definition wide enough to bring into its gamut credit on the standby transformer , sent in the situation as mentioned in the case and cleared on payment of duty. Thus credit could be taken on such standby transformers when received back.

Prepared by:- Ranu Dhoot

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PJ/Case Law/2014-15/2189

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