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of <h1>Tribunal upholds CENVAT credit reversal on capital goods based on depreciated value</h1> <h3>Commissioner of Central Excise, Hyderabad –III Versus M/s Bhagyanagar Metals Ltd.</h3> Commissioner of Central Excise, Hyderabad –III Versus M/s Bhagyanagar Metals Ltd. - TMI Issues:Interpretation of Rule 3(4) of CENVAT Credit Rules regarding reversal of credit on capital goods removed 'as such' after use.Analysis:The appeal was filed by the Revenue against the Order-in-Appeal issued against the respondents, who are manufacturers of excisable goods availing CENVAT credit. The issue revolved around the reversal of CENVAT credit on capital goods cleared 'as such' after being used for several years. The lower authority had confirmed the demand of duty under Section 11A(1) of the Central Excise Act, 1944, along with interest and penalties, based on the value declared in the sale invoices. The First Appellate Authority set aside this order, leading to the Revenue's appeal.The central question in this case was whether the term 'as such' in Rule 3(4) of CENVAT Credit Rules encompassed capital goods cleared after years of use, and if so, whether the respondent was obligated to reverse the credit taken at the time of purchase or pay duty on the depreciated transaction value. The Tribunal referred to various precedents, including decisions by the Hon'ble High Court of Madras and the Tribunal itself, which clarified that the credit reversal should be based on the depreciated value of the capital goods when removed after usage, rather than the full value originally availed. Following these precedents, the Tribunal upheld the First Appellate Authority's decision, stating that the reversal of CENVAT credit on the depreciated value of the capital goods was appropriate, and the demand for differential duty, interest, and penalties was correctly set aside.In conclusion, the Tribunal rejected the appeal and upheld the decision of the First Appellate Authority, emphasizing that the reversal of CENVAT credit on the depreciated value of capital goods used over time was in accordance with legal precedents. The impugned order was deemed to require no interference, and the appeal was consequently rejected.
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