Appellant wins appeal on excise duty liability for used capital goods sale.

The Tribunal allowed the appellant's appeal, ruling in favor of the manufacturer regarding the liability to pay excise duty on capital goods sold after use. The appellant successfully argued that no credit reversal was required on the transfer of used capital goods based on the specific provisions of the Cenvat Credit Rules and relevant precedents. The Tribunal found that the machinery, used for about 10 years before sale, did not qualify as being removed "as such," entitling the appellant to a 100% rebate on the credit, leading to the appeal being allowed with consequential relief as per the law.

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Issues:
1. Liability to pay excise duty on capital goods sold after use.
2. Interpretation of Cenvat Credit Rules regarding reversal of credit on capital goods.
3. Applicability of proviso to Rule 3(5) of the Cenvat Credit Rules, 2004.
4. Comparison with precedent cases.

Analysis:
1. The appellant, a manufacturer of parts of lifts/escalators, purchased a manufacturing facility including plant and machinery. After closing manufacturing operations, they intended to sell the machinery without reversing any excise duty. A show-cause notice was issued demanding excise duty on the transaction value of the capital goods sold. The appellant contested, and the order-in-original confirmed the demand along with interest and penalty. The Commissioner (Appeals) upheld the levy based on precedents. The appellant appealed to the Tribunal challenging the levy.

2. The appellant argued a change in legal provisions regarding the removal of capital goods. They highlighted the amendment in Cenvat Credit Rules 2002 and subsequent amendments. The appellant contended that as the machinery was acquired in 1995-96, the proviso to Rule 3(5) of the Cenvat Credit Rules, 2004 allowed for a 100% rebate on the credit. They relied on the Delhi High Court decision and a Tribunal case to support their claim that no credit reversal was required on transfer of used capital goods.

3. The Tribunal analyzed Rule 3(5) of the Cenvat Credit Rules, 2004, which mandates the reversal of credit only when goods are removed "as such." Since the machinery was used for about 10 years before sale, it was not considered as being removed "as such." The Tribunal also referred to the second proviso to Rule 3(5), allowing a 2.5% credit allowance for each quarter of use, leading to a 100% rebate in this case. Consequently, the Tribunal allowed the appeal, granting consequential relief as per the law.

4. The Departmental Representative relied on the impugned order, but the Tribunal's decision favored the appellant based on the specific provisions of the Cenvat Credit Rules and the application of relevant precedents. The Tribunal's detailed analysis of the legal provisions and precedents led to the conclusion that the appellant was entitled to a full rebate on the credit for the capital goods sold after use, resulting in the appeal being allowed with consequential relief as per the law.

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