CCE Vs. JAI MATA ALLOYS (P) LTD.

JUDGEMENT

(1.) REVENUE filed this appeal against the Order -in -Appeal No. 140/CE/CHD/06 dated 27.2.2006 passed by the Commissioner (Appeals).

(2.) THE relevant facts of the case, in brief, are that the Respondents are engaged in the manufacture of Cylinder Liners and other Engine parts classifiable under heading No. 8409 of the Schedule to the Central Excise Tariff Act, 1985. The Respondent cleared the goods on payment of concessional rate of duty under small scale exemption notification, which were returned by the buyer as defective goods on payment of higher rate of duty. The Respondent availed the credit of the whole duty paid by the buyer under Rule 16 of Central Excise Rules, 2000. The adjudicating authority denied the credit availed by the Respondent on the ground that the Respondents are entitled to avail the credit which were paid by them at the time of removal of the goods from their factory and imposed penalty. The Commissioner (Appeals) set -aside the adjudication order. Hence, the Revenue filed this appeal before the Tribunal.

(3.) LEARNED DR on behalf of the Revenue submits that in terms of Rule 3(4) of CENVAT Credit Rules 2002/2004, the buyer was required to pay the duty equal to the credit availed on such input/capital goods. He submits that in terms of Rule 16 of the Central Excise Rules, the assessee is entitled to take credit of duty on goods, which they paid at the time of removal of the goods from their factory.