PADMAVATHI METALS AND ALLOYS PVT. Vs. CCE

JUDGEMENT

(1.) This appeal is directed against the order in Appeal No. 116/2003 (M -II) dated 20.10.2003 passed by the Commissioner of Central Excise (Appeals), Chennai, by which the Commissioner has rejected the appeal filed by the assessee holding that since the inputs were received much before the crucial date viz. before 1.3.2002, the assessees are not entitled to take Cenvat Credit.

(2.) Brief facts are that the appellants are engaged in the manufacture of copper and copper alloys. They have cleared the final product on payment of duty, by utilizing benefit of Modvat Credit availed. The goods supplied by them were returned being defective on or before 1.3.2002. When they received back the goods, they availed Modvat Credit on the returned goods. The department was of the view that since the assessee has availed the Modvat credit on the rejected and returned good treating them as inputs, and since they have received the inputs before 1.3.2002, they are not entitled to take credit in terms of Rule 3(1) of the Cenvat Credit Rules read with Rule 16(1) of Central Excise Rules, 2002. Show cause notice was therefore issued which culminated in the order of adjudication passed by the original authority whereby he has demanded duty of Rs. 32,384/ - being the Modvat Credit taken by them, invoking the longer period of limitation in terms of Section 11A of the CE Act, read with Rule 12 of the CENVAT Rules, 2002, apart from imposing penalty of equal amount in terms of Rule 13(1) of the Cenvat Credit Rules, 2002. He has also demanded interest in terms of Section 11AB of the Act. Aggrieved by the said order the filed appeal before the Commissioner (Appeals), who by the impugned order rejected their appeal, hence the present appeal.

(3.) Appearing on behalf of the appellants, Shri M. Masilamoney, learned Consultant submitted that in terms of Rule 3(2), Cenvat Credit is admissible on inputs lying in stock. He has also invited my attention to the Larger Bench decision in the case of Hindalco Industries Co. v. CCE, Allahabad wherein it was held that credit of duty paid on final products is available in cases where such final products are subjected to melting and re -manufacture. He has also invited my attention to the decision of the North Regional Bench in the case of GM Balco v. CCE, Raipur reported in 2002 (147) ELT 1104 wherein in identical circumstances, it was held that credit was admissible. The said decision has referred to the decision of the Larger Bench ill the case of Himdalco Industries Ltd. (supra).