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of <h1>Court rules in favor of respondent on Cenvat credit for containers and reversal of credit on used capital goods</h1> The judgment upheld the respondent's entitlement to Cenvat credit on containers used for transporting capital goods, emphasizing their essential role in ... Cenvat/Modvat - Packing material for capital goods Issues:1. Entitlement to Cenvat credit on container used for transporting capital goods.2. Reversal of credit on used capital goods instead of paying duty as scrap.Entitlement to Cenvat credit on container used for transporting capital goods:The appeal involved a dispute regarding the entitlement of Cenvat credit on a container used for transporting capital goods. The department contended that since the container was separately assessed and not specified as a capital good under Rule 2 of the Cenvat Credit Rules, the CVD paid on the container should not be available as credit. However, the respondent argued that they ordered the capital goods, not the containers, and the value of the container was included in the assessable value as per Rule 9 of the Customs Valuation Rules. The adjudicating authority held that the Cenvat credit availed on the container was legal and proper, as the containers were necessary for transporting the specified capital goods, and the duty was paid accordingly. The judgment supported the respondent's position, emphasizing that the containers were part of the packing material essential for importing the capital goods, thus justifying the availability of CVD portion as Cenvat credit.Reversal of credit on used capital goods instead of paying duty as scrap:The second issue revolved around whether the respondent should have reversed the credit on two lathe machines, treated as scrap, instead of paying duty. The respondent argued that the used capital goods should not be equated with the removal of capital goods as such, citing relevant tribunal decisions. The adjudicating authority concurred, stating that the used capital goods did not fall under Rule 3(4) of the Rules, and thus, the reversal of Cenvat credit was not required. The judgment upheld this decision, affirming that the respondent was not obligated to reverse the Cenvat credit on the two lathe machines, as they were not considered as removed as such. The tribunal decisions cited by the respondent supported this interpretation, further validating the decision of the adjudicating authority.In conclusion, the judgment rejected the appeal filed by the department, upholding the decisions of the adjudicating authority regarding both issues. The entitlement to Cenvat credit on the container used for transporting capital goods and the reversal of credit on used capital goods were thoroughly analyzed and justified, leading to the dismissal of the department's appeal.
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