Used capital goods cleared on transaction value do not require reversal of original CENVAT credit after use.

On clearance of used and old capital goods after they had been put to use, duty paid on the transaction value was sufficient and did not require reversal of the entire CENVAT credit originally availed on receipt. The governing rule applied to goods cleared "as such", meaning without use, and that expression was not satisfied here. Prior tribunal and High Court interpretations supported the view that once capital goods have been used, only duty on transaction value is payable on removal. Accordingly, the assessee was not obliged to reverse the original CENVAT credit.

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Issues: Whether, on clearance of used and old capital goods on payment of duty on transaction value, the assessee was required to reverse the entire CENVAT credit originally availed on such capital goods.

Analysis: The clearance was of capital goods after they had been put to use. The applicable rule required payment of duty on the transaction value of used capital goods, and did not mandate reversal of the entire credit originally taken on receipt. The view was supported by the prior judicial interpretation that the expression "as such" means without putting the goods to use, and by the Tribunal and High Court authorities relied upon by the lower appellate authority.

Conclusion: The assessee was not required to reverse the CENVAT credit originally availed, and payment of duty on the transaction value of the used capital goods was sufficient.

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