ORDER
K.D. Mankar, Member (T)
1. The issue involved in this case is the availability of modvat credit on the self manufactured goods, exported initially for international trade exhibition and reimported on payment of duty, including (additional duty of Customs) CVD. The appellants filed the required declarations in respect of receipt of CVD paid sub-assemblies of machine received back and then availed modvat credit of the said CVD. The show cause notice alleged that, the appellant’s own goods can not be regarded as inputs to allow modvat credit under Rule 57A. The Assistant Commissioner adjudicated the show cause notice and dropped the demand. The said order was challenged before the Commissioner (Appeals), by filing appropriate appeal by the revenue. The Commissioner (Appeals) reversed the findings and set aside the order-in-original and confirmed the duty demanded in show cause notice. The appeal of the appellant’s challenges the order passed by the Commissioner (Appeals).
2. Heard both sides.
3. The order-in-appeal places reliance on judgment of the Tribunal in the case of Sigma Paints reported in 1994 (69) ELT 779 (Tri.) to deny the credit.
4. As against this, the appellants relied on the judgment in the case of M/s. Alcobex Metal Ltd., reported in 1993 (68) ELT 146 holding that once the goods stood rejected, they cease to be the final products and have to be treated as inputs only.
5. I find that the order passed by the Commissioner (Appeals) is self contradictory for denying the credit. It is stated that, the modvat credit is not available since no manufacture is involved and no new product comes into existence.
6. If that be the case, the second time duty was not required to be paid by the appellants. Consequently the credit of CVD was also not required to be taken and utilised for debiting the duty on the clearance of the said material to domestic customers. If the credit of CVD paid on the received material is not considered to be the credit of duty paid on the inputs, then, there was no requirement to make payment of duty at the point of clearance of the said products outside the factory.
7. In fact, there are judgments of the Tribunal holding that defective finished goods returned to the factory are inputs.
a) Vikas Engineering Ltd., v. CCE (2004 (112) ECR 485 (Tri)
b) Indalco Industries Ltd., v. CCE Allahabad (2000 (119) ELT 711 (Tri. – LB)
c) CCE, Meerut v. Tin Manufacturing Co. (2000 (119) ELT 290 (Tri. LB)
8. Ld. DR sought to distinguish the cases by saying that these goods have not been returned by the buyers but they had come back from international trade exhibition as unsold. This distinction does not make a material difference since the facts remain that the goods have come back to the factory unsold, and they had to be reassembled for sale to the subsequent buyers. In case the goods were acceptable to the buyers, as such, there was no need for the goods to have been returned to the factory for re assembly. Consequently the returned goods qualify to be considered as inputs and the credit denial was improper.
9. On this consideration, I allow the appeal and set aside the impugned order.
(Operative part pronounced in Court)