TaxTMI 
TaxTMI 
2011 (10) TMI 284
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....vailed CENVAT credit on various inputs or capital goods received in their factory. The said goods were destroyed in a heavy flood which had taken place on 26th July, 2005. The appellant had received a sum of Rs.1,39,69,851/- towards insurance claim on the subject goods excluding VAT and CENVAT and the said claim included an amount of Rs.27,77,437/- on account of loss of capital goods on which CENVAT was availed. Accordingly, a show-cause notice dated 01.10.2008 was issued demanding recovery of CENVAT credit of Rs.4,91,810/- on the depreciated value of the capital goods in terms of Notification No. 39/2007-CE (T) dated 13.11.2007. The notice was adjudicated by the jurisdictional Asst. Commissioner and vide Order dated 20.04.2009 disall....
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.... and conditions of CENVAT Credit Rules, 2004. Due to the flood, the capital goods were completely destroyed and they became waste and scrap and the goods were cleared by the appellant on 28th March, 2006, for a value of Rs.1,60,000/- and discharging a duty liability of Rs.26,612/-. There is no provision in the CENVAT Credit Rules, 2004 for reversal of credit taken when the capital goods are lost on account of natural calamities. In as much as the capital goods were damaged and became waste and scrap, the same were cleared as waste and scrap by discharging excise duty at the appropriate rate. The Counsel relies on the decisions of the Tribunal in the case of Motor Industries Co. Ltd. vs. CCE Bangalore - 2004 (167) ELT 242 (Tri. Bang.) wherei....
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....e same on payment of duty applicable to waste and scrap on the transaction value. Rule 3 (5A) of the CENVAT Credit Rules, 2004 provides that 'if the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on the transaction value.' In the instant case that is what has been done by the appellant. On the other hand the department seeks to arrive at the CENVAT credit required to be reversed by following two methods.While the Asst. Commissioner has arrived at the value by providing depreciation for the period of use and has confirmed the demand of Rs.4,91,810/-, the appellate authority has treated the insurance amount received as the consideration for the capital goods and have arrived....