But the larger question still remains
The Cenvat credit rules do not prescribe that credit should be taken only on the duplicate copy of the invoice. So there can be no dispute as to which copy should be used for taking credit. But when it comes to Rule 16, the situation is slightly different. The goods returned can be the original goods manufactured in the same factory or they could also be goods manufactured by others. There is no requirement under Rule 16 that only the goods manufactured by that factory should be brought back. That is goods manufactured by A originally cleared to B can be brought to C and C is eligible to take credit under Rule 16. Now what is the document that B can give to C? A’s invoice? But that will not show C as a consignee.
There no time limit before which duty paid goods can be brought to a factory. So technically goods cleared in 1986 can also be brought back and credit taken. But, on what document is the question. If the person who is sending back the duty paid goods is a manufacturer availing credit, there should be no problem as he can send these goods on his invoice which should be a good document for taking credit by the original manufacturer. But if this person is not a manufacturer, the problem comes. Why not return the original or duplicate copy of the invoice, you may ask. Easier said than done!
Take the case of a transformer manufacturer, who sells and cleared 100 transformers in an invoice to a state Electricity Board. Now this Electricity Board installs these transformers in 100 different locations. Power doesn’t flow through Central Excise Rules and some of these transformers are damaged. Now the Electricity Board sends 20 of these transformers to five manufacturers including the original manufacturer. Now how will these five manufacturers repairing the transformers take credit? Even if the original duplicate copy of the invoice is available, it can be sent to only one manufacturer. The department will invariably deny credit to four manufacturers and probably to the original manufacturer also. Under the old Rule 173H there was a provision for the Assistant Commissioner to allow bringing in of these duty paid goods without original duty paying documents. Simplification has seen many procedural requirements guillotined. The Rules have gone from the statutes but not the minds of the officers. Rule 16(3) provides for the Commissioner to issue instructions in case of any difficulty in following the procedure. In the guise of removing difficulties many Commissioners had actually prescribed difficulties.
The fact remains that it is not possible to have a proper duty paying document showing the manufacturer as consignee in case of duty paid goods brought to the factory under Rule 16. Further the rule does not mention anything about duty paying documents; it only says that credit can be taken as if such goods are received as inputs and it no where mentions that the procedure under the Cenvat Credit Rules has to be followed for taking credit. The requirement of following the procedure is only in respect of utilization of the credit, not for taking that credit. This must have been a consciously framed rule as it is not practically feasible to always produce a duty paying document in case of returned goods.