Tribunal allows credit transfer for capital goods relocation without penalty

The tribunal directed the appellant to reverse the credit on shifted capital goods at the original unit and avail it at the new unit without imposing a penalty, considering the appellant's bonafide belief and lack of other penal provisions invoked. The appeal was disposed of in favor of the appellant based on a precedent where a similar situation was deemed a procedural lapse not warranting duty demand.

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Issues: Appeal against demand for reversal of credit on shifted capital goods without penalty.

In this case, the appellant shifted used capital goods from one unit to another without reversing the credit availed on those goods, leading to a demand for reversal of credit, interest, and penalty. The appellant argued that the transfer did not constitute clearance, as the goods were used, and therefore, Rule 3(5) of CCR, 2004 did not apply. The appellant cited a precedent where a similar situation was considered a procedural lapse, not warranting duty demand. The tribunal found the circumstances similar to the precedent and directed the appellant to reverse the credit at the original unit and avail it at the new unit, without imposing a penalty under Section 11AC of CEA,1944 read with Rule 15 of CCR, 2004, due to the appellant's bonafide belief and lack of other penal provisions invoked. The appeal was disposed of accordingly.

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