1. The fact of the case is that the appellants are engaged in the manufacture of biscuits falling under Chapter Heading No. 1905 31 00 of Central Excise Tariff Act, 1985. They are availing Cenvat credit facility of various inputs. The appellant brought duty paid biscuits of various brands such as, Krack Jack, Hite & Seek Choco, Parle G 15 Gm from different vendors of Parle products under Central Excise invoices on which they have availed Cenvat credit to the tune of Rs. 90,75,836/- and utilized this credit for clearance of goods for export under the scheme of rebate. The said duty paid goods, i.e. finished products brought in packed condition and after stuffing in the container cleared for export. The case of the department is that since the appellants availed the Cenvat credit on finished products, i.e., biscuits and while exporting no manufactur
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ing activity has been undertaken the Cenvat credit under the provisions of Rule 2 of Cenvat Credit Rules, 2002 is not admissible on the ground that the credit is admissible only on the inputs which are used for or in relation to the manufacture of final products within the factory of production. It was contended that as per the provisions of Rule 3 of Cenvat Credit Rules, 2004, only a manufacturer of the final products shall be allowed to take Cenvat credit of duty. In the facts of the present case, the finished products i.e., biscuits are not inputs and the same was not manufactured by the appellants. Therefore, on the said manufactured goods, the credit is not admissible. Shri M.H. Patil, Ld. Counsel appearing on behalf of the appellant submits that the appellants have availed Cenvat credit in terms of Rule 16(1) of Central Excise Rules, 2002 whereunder it is provided that Cenvat credit can be availed on duty paid finished goods also if the same is received in the factory of the assessee for being remade, refined, reconditioned or for any other reason. As per sub-rule (2) of Rule 16, it is provided that if the said duty paid goods is cleared without undertaking the manufacturing process, the same is permissible by paying the excise duty equivalent to the Cenvat credit availed and if the process is subject to manufacture, the excise duty shall be paid in terms of valuation provisions under the Central Excise Act. Therefore, in the present case, the appellant carried out repacking of biscuits for the purpose of export which is covered under the term "for any other reasons". Therefore, when there is a special provision was made for allowing the credit on the duty paid goods received in the factory of the assessee, the Revenue cannot resort to general provisions of Cenvat Credit Rules, 2004 for disallowing the credit. In support, he placed reliance on the following judgments:
(a) Sarene Labs : 2005 (188) E.L.T. 290 (T)
(b) Tapsheel Enterprises - 2007 (216) E.L.T. 284 (T)
(c) Bala Handlooms Exports : 2008 (223) E.L.T. 100 (T)
(d) Bharat Pulverising Mills - 1997 (96) E.L.T. 716 (G.O.I.)
(e) C.B.E. & C. Cir. No. 283/117/96-CX, dated 31-12-1996.
2. On the other hand, Shri Ajay Kumar, Ld. Additional Commissioner (AR) appearing on behalf of the Revenue reiterates the findings in the impugned order.
2.1 He further submits that it is a basic law that for allowing the Cenvat credit on the inputs that firstly, the assessee should be manufacturer of the final products and the input on which credit is availed should be used in such manufacture. As regards the Rule 16, he submits that the term "for any other reason" is akin to the process, such as, remade, refined and reconditioned. The appellants have not undertaken either the said process or the process of the similar to that, therefore, even as Rule 16, the credit is not admissible. He placed reliance on the following judgments:
(a) Vignesh Alloys Pvt. Ltd : 2005 (189) E.L.T. 213 (Tri-Chennai)
(b) Alamgir & Another : 1959 AIR 436 : 1959 SCR Supl. (1) 464.
3. We have carefully considered the submissions made by both sides. We find that the Revenue has denied the Cenvat credit on the duty paid goods received by the appellants in their factory on the ground that firstly no manufacturing activity was carried out by the appellants on the finished products and secondly, the appellant also not carried out any process specific under Rule 16. In this regard, we read Rule 16 which is reproduced below:
16. Credit of duty on goods brought to the factory. - (1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being remade, refined, reconditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2002 and utilise this credit according to the said rules.
(2) If the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on goods received under sub-rule (1) at the rate applicable on the date of removal and on the value determined under sub-section (2) of Section 3 or Section 4 or Section 4A of the Act, as the case may be.
Explanation. - The amount paid under this sub-rule shall be allowed as CENVAT credit as if it was a duty paid by a manufacturer who removes the goods.
(3) If there is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assessee may receive the goods for being remade, refined, reconditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the Principal Commissioner or Commissioner, as the case may be.
3.1 From the above Rule 16, it is seen that the assessee shall be allowed the Cenvat credit in respect of duty paid on the goods received in the factory for the purpose of remade, refined, reconditioned or for any other reasons. As per sub-rule (2) of Rule 16, it is provided that when such duty paid goods is cleared by the assessee under two situations (i) the activity undertaken by the appellant does not amount to manufacture (ii) the activity undertaken by the appellant is amounting to manufacture. In both the above situation, the appellant can take Cenvat credit on the duty paid goods. The only condition is that if the activity does not amount to manufacture, the appellant is required to pay duty which should be equivalent to Cenvat credit availed and if the activity amounts to manufacture, the excise duty to be paid in accordance with the valuation provisions under Central Excise Act applicable to the manufacture of goods. As regards the contention of the lower authorities that the process even though it is not manufactured, the same should be remade, refined, reconditioned or similar process. We do not agree with this contention for the reason that firstly in the sub-rule (1) of Rule 16, it is provided that not only for the process of remade, refined, reconditioned but the duty paid goods can be brought into the factory for any other reason. In the facts of the present case, the appellants have brought the duty paid goods from various vendors and the same were repacked as per the requirements of export and goods were exported, even though the activity was not amount to manufacture, they have discharged excise duty. Therefore, in our view, the appellants have complied with the provisions of Rule 16(1) and (2).
3.2 We have gone through the judgments cited by the rivals. In the case of Serene Labs, (supra) that the Cenvat credit was allowed, even though the same was proposed to be denied on the classification dispute but the fact of that case is identical to this case. In the case of Tapsheel Enterprises (supra) the goods exported after testing and repacking, the Cenvat credit was allowed on the goods which were repacked and the same was allowed as rebate on export. The ratio of this decision is similar to the fact of the present case.
We are not going into all other judgments for the reason that in our considered view, the availment of Cenvat credit by the appellant is clearly covered by the provisions of Rule 16(1) and (2) of Central Excise Rules, 2002. As per our above observation, the appellants have rightly availed the Cenvat credit on the duty paid goods in terms of Rule 16. We, therefore, set aside the impugned order and allow the appeal