Per Archana Wadhwa :

After allowing the stay petition unconditionally, I proceed to decide the appeal itself with the consent of both the sides.

2. The issue involved relates to Cenvat credit availed by the appellant during the period March, 2003 to December 2003 in respect of plastic moulded furniture originally cleared by them on payment of duty and consequently returned to them by their customers as damaged/broken furniture. Such credit was availed by the appellant in terms of the provisions of the Rule 16 of Central Excise Rules, 2002. They have specifically contended before the authorities below that their dealers was returning the rejected furniture under their rejection memo and the same was invariably accompanied by the duplicate copies of the central excise invoices originally issued by them. These documents are clearly co-related to the returned furniture, as the furniture is printed with the month of manufacture, Rule 16 of Central Excise Rules, 2002 permits taking of credit on the returned goods. Reliance was placed upon the Tribunal's judgments in the case of Gebbs India Pvt. Ltd., reported in 1996 (16) RLT 493 (Tri.) and Gujarat Containers Ltd., 2000 (125) ELT 495 (Tri.).

3. The above contentions were not accepted and the authorities below rejected the appellants claim of credit and confirmed the demand of duty of Rs. 4,25,838/- and also imposed personal penalty of identical amounts. The Commissioner (Appeals), while rejecting the appeal, observed as under:-

"I have carefully examined the case records including the Appellants submissions made in writing at the time of personal hearing and observe that the Appellants are relying upon a number of CEG AT/ other judgments as cited in the ground of appeal. These judgments are not squarely applicable in the case in as much as the Appellants after receiving the defective goods are cutting into pieces and then mixing and mixing the scrap with fresh Raw Material and the quantity of the newly added fresh Raw Material is 50%. The goods cannot be manufactured out of the scrap of the returned goods. This shows that they are manufacturing new products and it cannot be said that the same returned goods are remade or remanufactured. Moreover, I have already dismissed the appeal of the same Appellant on the same issue for the earlier period vide Order-in-Appeal No. 420/CE/CHD/2004 dated 11.06.2004. I also fully agree with the findings of the Adjudicating Authority and as such uphold the Order-in-Original".

4. I have heard Shri M.H. Patil, Ld. Advocate and Shri N.V.B. Nair, Ld. JDR.

5. Shri Patil has drawn my attention to Rule 16 of Central Excise Rules, 2002. For better appreciation, the same is being reproduced below:

"Rule 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 re-made, refined, reconditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled the take CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2002 and utilise the credit according to the said rules.

(2) In the process to which the goods are subjected before being. . removed does not amount to manufacture, the manufacturer shall pay an amount equa. 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) equa. 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) and 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.

(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 re-made, refined, re-conditioned or for any other reason a