Whether credit on invoice issued by buyer for goods returned under Rule 16 deniable on the contention that buyer is not registered dealer under Central Excise Act?

PJ/Case law/2013-14/1874

Case:-V.K. VALVES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JALANDHAR

Citation:-2013 (294) E.L.T. 130 (Tri.-Del.)

Brief Facts:- The appellant is a manufacturer of ball valves. One consignment of 3300 pieces of ball valves were sent to one party of name Bath Well by invoice No. 241 dated 26-8-2006 on payment of duty. The appellant received back 2112 pieces of ball valves as rejected under the cover of invoice No. 1/06-07 dated 23-12-2006 issued by Bath Well. The appellants received the defective goods for repair and reconditioning under Rule 16 and took credit of duty originally paid by them. It is on record that the goods received back have been taken in RG-1 and cleared on payment of duty, subsequently after repairing the goods. The credit taken stands disallowed on the ground that the credit has been taken on the basis of invoices issued by Bath Well who is not registered with Central Excise Department as a dealer.

Appellant Contentions:- The appellant submitted that in case of taking credit under Rule 16, when the buyer was returning the goods as defective and the said goods requires to be cleared on payment of duty subsequently, there is no stipulation that buyers should be registered under Central Excise Act. He also submits that invoice issued by the buyer who returned the goods is for accounting purpose and credit has been taken only based on original invoice of the appellants under which the goods have been dispatched on Bath Well on payment of duty.

Respondent Contentions:-Learned Respondent reiterates the findings and reasoning of Commissioner (Appeals).

Reasoning of Judgment:-We have carefully considered the submission and perused the records. It is not a case of taking credit of duty on cenvatable goods sold by a registered dealer. It is a case of the manufacturer initially clearing the goods on payment of duty and part of the goods having been received back on the ground that the same were found to be defective and for the purpose of repair or reconditioning. It is not disputed that the goods have been received under Rule 16 of the Central Excise Rules. The explanation that the invoices issued by Bath Well is for accounting purposes and for return of originally supplied goods has been overlooked. Further the claim that the appellants have taken credit based on original invoices under which the returned goods were cleared on payment of duty has been overlooked.

In view of the above, the appellant has made out a case for interfering with the order of the Commissioner (Appeal). The order of Commissioner (Appeal) is set aside and the appeal is allowed with consequential relief, as per law.

Decision:- Appeal is allowed.

Comment:-The essence of this case is that the contention that the invoice of the buyer is not valid document for availing credit under Rule 16 as the buyer is not registered dealer under the Central Excise Act is not tenable when the credit is being availed on the basis of original invoice issued by the manufacturer.

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