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of <h1>Tribunal rules no duty on used capital goods removal pre-2007 amendment</h1> <h3>Power Plastech Private Limited Versus CCE, Bangalore</h3> Power Plastech Private Limited Versus CCE, Bangalore - TMI Issues:- Liability to reverse CENVAT credit on capital goods when removed after use.Analysis:1. The appeal challenged the order passed by the Commissioner (Appeals) rejecting the appellant's appeal and upholding the order-in-original. The appellant, engaged in manufacturing plastic chairs, availed CENVAT credit on capital goods used in production. The department alleged contravention of Rule 3(5) of CENVAT Credit Rules 2005, leading to a show-cause notice and subsequent confirmation of charges and penalties by the Additional Commissioner.2. The appellant contended that the impugned order contradicted established legal precedents and that no duty was payable on removal of used capital goods before the amendment on 13.11.2007. Citing judgments like Cummins India Limited Vs. CCE, Pune and Madura Coats P. Ltd. Vs. CCE, Tirunelveli, the appellant argued against the necessity to reverse credit on used capital goods. The High Court of Bombay's affirmation of this view was also highlighted.3. The respondent supported the impugned order, referencing judgments like Modernova Plastyles Pvt. Ltd. Vs. CCE, Raigad and Harsh International Pvt. Ltd. Vs. CCE, Delhi II, asserting the liability to pay duty on removal of used capital goods.4. The Tribunal analyzed the legal provisions and case law interpretations regarding the reversal of CENVAT credit on used capital goods. Notably, the amendment on 13.11.2007 clarified the liability to pay duty on such goods. The Tribunal referred to the Punjab and Haryana High Court's decision in Commissioner of Central Excise, Ludhiana v. Khalsa Cotspin (P) Ltd., emphasizing the need to reverse credit only if goods were cleared without excise duty payment.5. Relying on various High Court judgments, including those of Bombay, Delhi, and Karnataka, the Tribunal concluded that prior to the 2007 amendment, no duty was payable on the removal of used capital goods. Following the Karnataka High Court's precedent, the Tribunal held the impugned order unsustainable in law and allowed the appeal with consequential relief.This detailed analysis of the judgment highlights the legal intricacies surrounding the liability to reverse CENVAT credit on capital goods removed after use, emphasizing the significance of legal precedents and statutory provisions in reaching a decision.
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