Grafica Flextronica Vs Commissioner of GST & CE (CESTAT Mumbai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, allowed the appeal filed by the assessee and set aside the orders confirming recovery of CENVAT credit amounting to Rs. 23,40,974, along with interest and equal penalty. The Tribunal held that the credit availed under Rule 16 of the Central Excise Rules, 2002 was admissible, as there was no requirement under Rule 16(2) that remanufactured goods must be returned to the same customer who had originally returned the defective goods.
The dispute arose when the appellant-manufacturer had cleared a screen printing machine to M/s Yogi Display Arts Pvt. Ltd. on payment of central excise duty amounting to Rs. 23,40,974. Due to technical defects, the machine was returned to the appellant along with the original invoices. Upon receipt of the machine, the appellant availed CENVAT credit of the duty originally paid by invoking Rule 16 of the Central Excise Rules, 2002 read with the CENVAT Credit Rules, 2004.
The appellant subsequently used components from the returned machine to manufacture a smaller-sized machine, which was sold to another buyer, M/s Ace Media Solutions Pvt. Ltd., Bangalore, on payment of applicable central excise duty. The unused parts and components of the returned machine were cleared as scrap after payment of excise duty.
