TaxTMI 
TaxTMI 
2011 (6) TMI 514
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....ods such as colour television sets, audio systems, including arts components sub-assemblies. The appellants are availing Modvat/Cenvat credit of the Central Excise duty paid on the inputs used in the manufacture of its various said finished goods as per the erstwhile Rule 57A of the Central Excise Rules, 1944 and the Cenvat Credit Rules, 2002/2004. 4. On an intelligence that the appellants had periodically rendering its inputs obsolete in its financial books of accounts and that in such cases, they had not paid back the Modvat/Cenvat credit availed by them thereon, the investigations were initiated by the DGCEI. Statements were recorded and it was found that the appellants required various electrical, electronic and hardware items such as capacitors, resistors, wires, etc., for use in the manufacture of electronic goods manufactured at both the said units. The appellants on receipt of inputs under the relevant duty paying documents, account for such receipts in its RG 23A Part I account and take credit in RG-23A Part-II account as per the duty paying documents. It appears that the appellants have also separate store accounts system to account for receipt ....
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....llants have a practice to identify the inputs eligible for obsolescence in quantity and value terms on periodical basis. The manner in which such identification is done to list out such inputs were produced by the appellants. 6. In view of the discussion made herein above, the removal of obsolete inputs from the stores/stores accounts, does not tantamount to their 'disposal/sale' as 'inputs as such' and that it only amounts to removal for disposal of assorted scrapped material, not falling in the category of removal of inputs for 'home consumption' as envisaged in the Modvat/Cenvat credit provisions. In other words, the obsolete inputs once taken out at cost from the financial account, loose their identity as inputs or that they cease to be within the practice followed by the appellants and also within the meaning of law, as in no case they are equitable to removal of 'inputs as such' as provided in the relevant Modvat/Cenvat Rules. Therefore, the stage at which the inputs are rendered obsolete and removed at cost from the financial accounts represent the stage of 'removal of inputs as such' within the Modvat/Cenvat provisions calling for reversal of duty cred....
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....9/- was proposed to be recovered along with interest and a proposal of penalty under Section 11AC of Central Excise Act, 1944 was also proposed. The show-cause notice was adjudicated and demands proposed in show-cause notice were confirmed along with interest and a penalty of equivalent amount under Section 11AC was also imposed. Aggrieved by the said order, the appellants are before us. 7. On going through the facts of the case, the following issue has arisen before us to be decided: (a) prior to 11/05/2007, whether the appellants are required to reverse Modvat/Cenvat credit availed on inputs which has been removed from their financial accounts as obsolete and not removed from their factory as such or not? (b) whether the demands for the period when obsolete inputs were written off from the financial accounts in the year 1996 can be demanded by invoking extended period of limitation through a show-cause notice dated 25/11/2004 or not? and ; (c) whether the Commissioner can ask the appellants to produce the records for disposal of the obsolete inputs which was not alleged in the show-cause notice or not ? 8. Shri Prakash Shah, Ld. Advocate for ....
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....t in the case of CCE, Belapur Vs. Hindalco Industries Ltd., in CE Appeal No.73 of 2010, the Hon'ble Bombay High Court vide their order dated 07/06/2011 has held that prior to the insertion of sub rules (5B) and (5C) in Rule 3 of Cenvat Credit Rules, 2004, reversal of Cenvat credit is not required before removal following the decision in the case of CCE Vs. Indian Petrochemicals Corporation Ltd., reported in 2008 (226) ELT 339 (Bom). He further relied on the decision of Godrej Industries Ltd., Vs. CCE, Mumbai, reported in 2008 (229) ELT 484 (SC) to support the contention that the ground which are not taken in the show-cause notice, the department cannot go beyond that. He also submitted that in the show-cause notice, the demands have been made for the non-reversal of Cenvat credit on obsolete inputs in financial accounts for period 1996 through a show-cause notice issued in 2004. As per the provisions of Section 11A(1), the demands can be made by invoking the extended period of limitation for maximum of five years from the date of show-cause notice. Therefore, the demands cannot be made for the period 1996. Hence, the impugned order is not sustainable i....
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....nt shall not be required to be made where any inputs or capital goods are removed outside the premises of the provider of output service for providing the output service: Amended vide Notification No. 10/2008 -Central Excise (N.T.), dated 01/03/2008) 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 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, of their removal. [Omitted vide Notification No. 10/2008 -Central Excise (N.T.), dated 01/03/2008 ] Provided also that if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output service shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by 2.5 per cent for each quarter of a year or part thereof from the date of taking the Cenvat Credit;". [Ins....