Duty paid on Transformer received from Customer allowable as CENVAT Credit under rule 16: CESTAT [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Mumbai bench has held that duty paid on transformer received from the customer allowed as CENVAT credit under rule 16.

The Appellant, M/s. Crompton Greaves Ltd. engaged in the manufacture of excisable goods falling under chapter sub-heading no. 8504.00 of the First Schedule of the Central Excise Tariff Act, 1985 where the assessee was also availing the facility of CENVAT credit. 

The appellant had received in their factory excisable goods transformers along with accessories for repair/rectification without original duty paying documents from their customers and the appellant availed Cenvat credit in their Cenvat account in respect of transformers into their factory on the strength of Xerox/photocopy of a triplicate copy of their invoice under which the goods were originally cleared by the appellant on payment of duty. 

The assessee was aware that when the customer from whom the goods were received for repairs does not have the original duty paying documents, they were so required to apply for permission under Rule 16(3), of the Central Excise Rules, 2002 and applied the same.

The appellants availed duty credit of Rs. 1,27,611/- on rejected goods based on their original copy of the invoice. The lower authorities held that in as much as in terms of the provisions of Rule 16 of Cenvat Credit Rules, 2002 (sic) the credit on returned goods is admissible as “if such goods are received as inputs” under the Cenvat Credit Rules.

It was evident that Rule 16 provides availment of cenvat credit by the manufacturer equivalent to the duty paid by him. Rule 16 allows a manufacturer to receive back the rejected goods and to avail the credit of duty originally paid by them under the cover of the invoice issued at the time of clearance of the goods.

The Tribunal Mr Sanjiv Srivastava, member (technical) and Mr Ajay Sharma, member (judicial) while allowing the appeal, set aside the impugned order and held that “the goods stand returned in the present case and the appellant would be entitled to the credit, in terms of the said rules.”

Shri Aditya Chitale appeared for the Appellant and Shri Sydney D’Silva appeared for the Respondent.

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