2026-VIL-1006-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Cenvat credit on returned goods under Rule 16(2) of Central Excise Rules, 2002 - Remanufactured machine sold to different buyer – Demand of recovery of Cenvat credit, contending that the same machine was not returned to the same customer - Whether the appellant is entitled to claim cenvat credit under Rule 16(2) of the Central Excise Rules, 2002, when goods returned for remanufacturing are not returned to the original buyer but are instead remanufactured into a different product and sold to another buyer – HELD - Under Rule 16(2) of the Central Excise Rules, 2002, the determining factor for claiming cenvat credit is the date of removal (clearance). The rule does not mandate that the remanufactured goods must be returned to the original buyer who returned the goods. The provision uses language such as "re-made, refined, re-conditioned or for any other reason" which does not specify that the resultant outcome should be identical to the original product or that it must be returned to the same sender - The CBEC circular F.No. 354/66/2001-TRU dated 21.06.2001 cited by the department applies specifically to Rule 16(1) regarding return of goods, not to Rule 16(2) which governs remanufacturing cases. The provision does not require that remake or reconditioning result in goods of the same shape and size – Further, the Commissioner's finding that the appellant failed to prove use of all old machine parts travelled beyond the grounds stated in the SCN and amounted to an impermissible expansion of the department's original position - The manufacturer is entitled to avail cenvat credit as the conditions precedent for credit under Rule 16(2) were satisfied. The appeal is allowed
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