Used capital goods sale did not trigger Cenvat credit reversal, and installation value could not replace transaction value.

Used capital goods sold after long use were held not to fall within Rule 3(4) of the Cenvat Credit Rules, because that provision applies to capital goods removed as such. The Tribunal followed its earlier decisions and treated the later amendment relied upon by the Revenue as prospective only, with no application to the relevant period. On that basis, the demand based on adopting installation value instead of transaction value on sale was not sustainable, and no reversal of Cenvat credit or duty liability arose on the sale of the used capital goods.

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Issues: Whether used capital goods sold by the assessee attracted reversal of Cenvat credit or duty liability under Rule 3(4) of the Cenvat Credit Rules, and whether the value to be adopted could be the installation value instead of the transaction value on sale.

Analysis: The appeal concerned removal and sale of capital goods after long use. The Tribunal followed its earlier decisions holding that used capital goods are not covered by Rule 3(4) of the Cenvat Credit Rules, which applies to capital goods removed as such. It also noted that the later amendment relied upon by the Revenue could operate only prospectively and could not govern the dispute for the relevant period. On that basis, the demand based on adoption of the installation value was not sustainable.

Conclusion: The assessee was not required to reverse Cenvat credit or pay duty on the sale of the used capital goods, and the impugned order was liable to be set aside.

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