TaxTMI 
TaxTMI 
2010 (3) TMI 598
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....ruitful result, the appellants have approached this Tribunal by this appeal. 3. The appellants are engaged in manufacture of decorative plywoods, paper based decorative laminate sheets, aluminium clad laminates and electric insulators, other laminated boards and had cleared capital goods namely "short cycle press machine" under Invoice Nos. 4325, 4326 and 4327, dated 4-10-2006. While accusing the appellants of short payment of duty to the tune of Rs. 11,07,117, a show-cause notice came to be issued to the appellants which was contested by the appellants. It is undisputed fact that the appellants had cleared "short cycle press machine" to their another unit located at Rudrapur under the said invoices on payment of duty of Rs. 6,88,000. It is also undisputed fact that while procuring the said capital goods, the appellants had availed the credit to the tune of Rs. 17,95,117. It is the case of the Department that though the amount of duty paid was only Rs. 6,88,000, the credit has been availed to the tune of Rs. 17,95,117 and hence, the appellants have violated the provisions of rule 3(5) of the CENVAT Credit Rules, 2004 and thereby have evaded the payment of duty to the tune....
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....al to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9 : Provided that such payment shall not be required to be made where any inputs are removed outside the premises of the provider of the output service for providing the output service : Provided further that such payment shall not be required to be made when any capital goods are removed outside the premises of the provider of output service for providing the output service and the capital goods are brought back to the premises within 180 days, or such extended period and not exceeding 180 days as may be permitted by the jurisdictional Deputy Commissioner of Central Excise, or Assistant Commissioner of Central Excise, as the case may be, or their removal." 8. Similar issue arose in Cummins India Ltd.'s case (supra) wherein it was held thus:— "2. The dispute in the present appeal relates to the issue as to whether the appellants were required to pay duty at the assessable value of the capital goods or they were required to reverse the quantum of credit originally availed by them at the time of receipt of....
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....red at that stage, the same cannot be said to have been cleared as such and in such a situation, the reversal of Cenvat credit taken will be required. But if the capital goods are removed after some use, at a stage in between the "unused" and "fully scrapped'", they have not lost their identity as capital goods and since on removal of totally unused capital goods, full Cenvat credit is required to be reversed and on removal of unserviceable capital goods, removal as scrap, no Cenvat credit would be required to be reversed, in case of removal of used capital goods in between unused stage and scrap stage, when the capital goods, though used, have still retained their identity as capital goods, it would be logical to insist on reversal of Cenvat credit depending upon the extent of use, which would be more or less the duty chargeable on the depreciated value of the used capital goods. If the Department's view is accepted, it would lead to absurd results as even when the cenvated capital goods are cleared after long years of use at a small practice of their original value, still full Cenvat credit originally taken would be required to be reversed which would defeat the very purpose of g....
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..... CCE, Raigad (supra) has held that the expression "as such" in rule 4(5)(a) and rule 3(4)(c) of the Cenvat Credit Rules, 2004 means without any addition, modification or alternation, it does not have any connection with the goods being used or unused and that the "capital goods removed as such" can be the unused as well as used conditions. It is only when the capital goods have become scrap, that their identity changes and they cease to be the capital goods. Since in respect of removal of unused capital goods, as such, full amount of credit taken is required to be reversed and in case of removal of fully scrapped capital goods removed as scrap, as per the provisions of rule 3(5A), only an amount equal to the duty on the transaction value of the scrap is required to be paid, in the case of removal of capital goods after use, which are still identifiable as capital goods, though used, it would be logical to insist on proportionate credit depending upon the period of use i.e., the quantum of credit to be reversed should be determined by reducing from the credit originally taken at the time of receipt, an amount in proportion to the period of use and in this regard, it would be fair a....
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....cting decisions given by the various Benches of CESTAT, the reason being that the Rules have not been properly drafted". The absence of provisions during the period from 1-3-2003 to 12-11-2007 in respect of quantum of Cenvat credit to be reversed if cenvated capital goods are cleared after use, as capital goods, [as a result of which if literal interpretation of rule 3(4) of Cenvat Credit Rules, 2002/rule 3(5) of Cenvat Credit Rules, 2004 is adopted, full Cenvat credit originally taken would be required to be reversed, even if the capital goods are cleared after long period of use at a small fraction of their original price, while during the period prior to 1-3-2003 and during the period from 13-11-2007 either there were separate and specific provisions for Cenvat credit reversal in the case of removal of capital goods after use, providing for reversal of proportionate credit depending upon the period of use, or the provision regarding removal of Cenvat credit were so worded that the same took care of the case when the capital goods are removed after being used], is obviously due to a drafting mistake having crept in, in course of drafting and redrafting of rules relating to Cenvat....
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....in March, 2003 at much reduced value on payment of an amount equal to duty on the transaction value, instead of the Cenvat Credit originally taken, as demanded by the Department. The Tribunal in this case, set aside the demand for differential amount. The Tribunal's judgment, has been upheld by Hon'ble Bombay High Court vide judgment reported in 2009 (234) ELT.A-120." 11. Similarly, in L.G. Balakrishnan & Bros.' case (supra), the Tribunal after taking note of the decision in Madura Coats (P.) Ltd. v. CCE 2005 (190) ELT 450 (Trib. - Bang.) held thus:— "3. I have carefully considered the facts of the case and the submissions made by the learned JDR. Rule 3(5) of CCR, 2004 prescribes that when inputs or capital goods, on which Cenvat credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the credit availed in respect of such inputs or capital goods. I find that in Madura Coats (P.) Ltd. v. CCE, Tirunelveli reported in 2005 (190) ELT 450 (Trib. - Bang.) the Tribunal had interpreted the scope of this rule as regards capital goods. It was held that used capital goods were not capital goods as ....
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....on in Cummins India Ltd.'s case (supra) was subjected to challenge before the Bombay High Court. However, the said challenge was dismissed observing thus:— "We find that the view taken by the Tribunal is in consonance with law". 14. Apparently the Bombay High Court has confirmed the consistent view taken by the Tribunal in various judgments while dismissing the challenge to the order in Cummins India Ltd.'s case (supra). 15. It is true that the Larger Bench while dealing with the scope and ambit of the expression "as such" has observed that the said expression has to be interpreted as commonly understood, which is in the "original form" and "without any addition, alteration or modification" and that the said expression has no connection with the goods as being new or unused or used, however, it is to be noted that the Larger Bench was dealing with the said expression as used in rule 4(5)(a) of the said Rules and the said rule reads thus:— "The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, reconditioning or any ....