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of <h1>Successful appeal against duty demand for clearing capital goods as scrap without availing cenvat credit.</h1> <h3>Reaselack Polymers Pvt. Ltd. Versus Commissioner of Central Excise, Nagpur</h3> Reaselack Polymers Pvt. Ltd. Versus Commissioner of Central Excise, Nagpur - TMI Issues:1. Liability to pay duty under Rule 3(5A) of Cenvat Credit Rules, 2004 for clearing capital goods as scrap after more than 10 years of use.Analysis:The appellant had removed capital goods after using them for over 10 years, leading to a demand for duty under Rule 3(5A) of the Cenvat Credit Rules, 2004. The Commissioner (Appeals) upheld the demand, prompting the appellant to appeal. The appellant argued that they had purchased the property, including plant and machinery, from a government undertaking without availing any cenvat credit. They contended that since they did not take any credit, Rule 3(5A) should not apply to them. The Commissioner (Appeals) assumed that the earlier owner might have availed the credit, but there was no evidence to support this claim.The Revenue supported the findings of the impugned order, reiterating the duty demand. However, the Member (Judicial) carefully analyzed the case. It was noted that duty is payable on capital goods only if cenvat credit was availed at the time of receipt. In this instance, the appellant did not avail any credit when purchasing the capital goods from the government undertaking. The Commissioner (Appeals) based the duty demand on the lack of evidence regarding the non-availment of credit by the earlier owner, which was beyond the scope of the show cause notice and thus unsustainable.The judgment emphasized that for Rule 3(5A) to apply, it must be established whether the assessee who removed the capital goods availed cenvat credit. As the appellant did not avail any credit, the demand under Rule 3(5) was deemed unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief. The decision clarified that in the absence of evidence of cenvat credit availed by the appellant, the duty demand under Rule 3(5A) was not tenable.
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