Appeal allowed on cenvat credit for Injection Moulding Machines

The Revenue's appeal against the order-in-appeal passed by the Commissioner regarding the availing of cenvat credit on Injection Moulding Machines was allowed by the Tribunal. The matter was remanded for reconsideration in light of conflicting views on the reversal of credit on capital goods cleared after use, as per the principle established by the Larger Bench. The Commissioner (Appeals) would address the pending issues following the principle of law set by the Larger Bench, leading to the allowance of the Revenue's appeal by way of remand.

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Issues:
1. Appeal against order-in-appeal passed by the Commissioner
2. Availment of cenvat credit on Injection Moulding Machines
3. Allegation of not reversing credit availed on capital goods
4. Confiscation of capital goods and penalty imposition
5. Interpretation of Rule 3(5) of Cenvat Credit Rules, 2004

Analysis:
1. The appeal was filed by the Revenue against the order-in-appeal passed by the Commissioner, challenging the availing of cenvat credit on 16 Injection Moulding Machines. The respondent cleared these machines later, discharging duty on the transaction value. A Show Cause Notice was issued for recovery of the differential amount, interest, and penalty. The Ld. Commissioner (Appeals) allowed the appeal, leading to the Revenue's current appeal.

2. The Revenue contended that the credit availed on the capital goods needed to be reversed at the time of clearance, citing the Larger Bench Judgment in Navodhaya Plastic Industries Ltd. case. The respondent argued against this demand, stating that the clearance of capital goods as such was an invalid ground for recovery, referencing the judgment of the Hon'ble Bombay High Court in Commissioner vs Cumins (I) Ltd.

3. The Larger Bench in Navodhaya Plastic Industries Ltd. case addressed conflicting views on the reversal of credit on capital goods cleared after use. The Tribunal observed that the full credit taken at the time of receipt need not be reversed, but the quantum of credit to be reversed varied among different High Courts. The issue was referred back to the Ld. Commissioner (Appeals) to decide afresh in light of the principle laid down by the Larger Bench.

4. The Tribunal noted that the decision of the Larger Bench was not available before the Ld. Commissioner (Appeals), hence, the matter was remanded for reconsideration. The Commissioner (Appeals) would address the pending issues while disposing of the appeal, following the principle of law established by the Larger Bench. Consequently, the Revenue's appeal was allowed by way of remand to the Commissioner (Appeals).

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