BAPL INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE lower authorities have denied CENVAT credit of Rs. 11,0187 - to the appellant on a certain quantity of their final product returned by their buyer under cover of a letter, wherein it was stated that a part of the consignment was being returned on account of the goods not conforming to their specifications. Such return of the goods was under cover of invoices No. 216 dated 4 -3 -2003 and No. 228 dated 10 -3 -2003 issued by the appellant at the time of original clearance of the goods. The denial of credit to the appellant is on the ground that the goods were not received by them under cover of any valid cenvatable document. This ground is being challenged now. Ld. Counsel for the appellant submits that the benefit of CENVAT credit is not deniable inasmuch as the substantive requirements were, undisputedly, fulfilled. The goods were duty -paid and were reprocessed into fresh defect -free final product in the appellants' factory. Ld. Counsel points out that the relevant Rule (Rule 7 of the Cenvat Credit Rules, 2002) did not prohibit triplicate copy of invoices from being used for Cenvat purpose and that any prohibition, in this regard, was only in respect of 'extra copy' of invoice. In this connection, reference is made to Rule 11(3) of the Central Excise Rules, 2002 as also to Supplementary Instruction No. 4 of the Supplementary Instructions, 2005 issued by CBEC (vide CBEC's Excise Manual). Ld. Counsel submits that, in terms of Rule 7 ibid, input -duty credit could be taken by a manufacturer of final product on the basis of an invoice issued by the manufacturer of input. In the present case, by virtue of Rule 16(1) of the above Central Excise Rules, the defective final product returned by the buyer should be deemed to be 'input' for the assessee and, therefore, the invoice, under cover of which such goods were received by the assessee, would be deemed to be an invoice issued by input -manufacturer. Any copy (other than extra copy) of such invoice could be employed for Cenvat purpose. In the instant case, the credit was taken on the basis of triplicate copy of invoice. Hence, according to Id. Counsel, it was validly taken. Ld. SDR reiterates the findings recorded in the impugned order and also relies on Trade Notice No. 90/2003, dated 20 -11 -2003 issued by the Commissionerate of Central Excise, Coimbatore. This trade notice lays down a "revised procedure" for receipt of duty -paid goods for repairs, reconditioning etc., under Rule 16 of the Central Excise Rules, 2002.

(2.) AFTER giving careful consideration to the submissions, I am inclined to accept the arguments of Id. Counsel. Rule 16(1) of the Central Excise Rules, 2002 laid down that, where any final product cleared by a manufacturer on payment of duty was returned by the buyer for being remade, refined, reconditioned etc., the former would be entitled to take CENVAT credit of such duty as if such goods were received as 'inputs' under the CENVAT Credit Rules, 2002. Admittedly, in the present case, the final products cleared by the appellant on payment of duty under the aforesaid invoices dated 4 -3 -2003 and 10 -3 -2003 were returned by the buyer and such duty was taken as CENVAT credit by appellant treating the goods as inputs. The only objection of the Department is that such credit was taken on the basis of allegedly inadmissible documents. These documents are triplicate invoices dated 4 -3 -2003 and 10 -3 -2003 originally issued by the appellant themselves. I find that, by virtue of the deeming provisions of Rule 16(1), where the final product returned by the buyer was deemed to be input by the assessee, the duty -paying document covering the goods should also be deemed to have been issued by input -manufacturer. In other words, when the appellant took CENVAT credit of the duty paid by themselves on the goods in question, they were doing so on the basis of invoices of input -manufacturer. Rule 11(3) of the Central Excise Rules, 2002 laid down the manner in which the invoices should be prepared. Accordingly, an invoice should be prepared in triplicate viz., 'ORIGINAL FOR BUYER', 'DUPLICATE FOR TRANSPORTER' AND TRIPLICATE FOR ASSESSEE'. This provision did not specify as to which of these documents could be used for Cenvat purpose. In this context, CBEC's instructions would govern the field. After referring to the above 3 copies of an invoice, Instruction No. (4.2) reads as under: -

(3.) LD . SDR has relied on a Trade Notice which apparently revised the procedure for receipt, by the manufacturer, of a final product returned by his buyer for the purpose of remaking, reconditioning etc., under Rule 16(1) of the Central Excise Rules, 2002. This Trade Notice inter alia provides as under: -