2014 (12) TMI 31

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....ufacture of Aluminium components classifiable under Chapter 76 of the CETA, 1985. They were availing CENVAT credit benefit under the CENVAT Credit Rules, 2002 on inputs and capital goods. Unit - I availed CENVAT credit on capital goods and cleared as such under the cover of challans to their Unit - II. On 25.3.2003, the Central Excise officer during their visit found that Unit - I removed the capital goods as such to Unit - II without reversal of the credit. The said officers seized the capital goods lying in Unit - II. Subsequently, Unit - I applied for provisional release of the seized capital goods, which were seized on 25.3.2003. The seized goods were provisionally released. A show-cause notice dated 12.8.2003 was issued by the Addition....

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....how-cause notice during the period 12.4.2003 to 15.5.2003. Unit - II also availed the credit on the basis of the invoices issued by Unit  I. He submits that as per Rule 4(5)(a) of the said Rules, there is no requirement of reversal of the credit for removal of capital goods as such to a job worker for further process. However, Unit  I already paid the duty which was availed by Unit  II and therefore he is not contesting the demand of duty. He undertakes not to claim refund of the duty amount as already paid. He has restricted his appeal mainly on the demand of interest and imposition of fine and penalties. The submissions of the learned consultant are precisely as under:-         &nb....

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....ty and Unit - II availed the CENVAT credit and it is a clear case of revenue neutrality and relied upon the decision of the Tribunal in the case of Zenith Machine Tools Pvt. Ltd. Vs. CCE - 2010 (255) ELT 83. (e) Regarding confiscation of the goods, Rule 13 of Rules, 2002 would apply on taking CENVAT credit in respect of input or capital goods wrongly or without taking reasonable steps. In the present case, there is no dispute that Unit  I had taken credit correctly. So, confiscation and penalty are not sustainable. (f) Unit - II is only a recipient of the capital goods and has no involvement and therefore penalty is not sustainable. 4. On the other hand, the learned AR for Revenue reiterates the findings of the Commissioner (A....

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....rsal of credit and interest provision would rightly invoked. 5. After hearing both sides and on perusal of the records, I find that Unit - I availed CENVAT credit on the capital goods, namely various machines, which they have sent to their Unit - II for the purpose of production of the goods. It is contended by the learned consultant that Unit - II is a job worker, who returns the goods to Unit - I after job work. The learned counsel submitted that they have cleared the goods under Rule 4(5)(a) of Rules, 2002. The relevant portion of Rule 4(5) is reproduced below:-               4(5)(a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or aft....

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....l in the case of Sree Ganesar Textile Mills Ltd. (supra), while dealing with the removal of capital goods to the job worker Under Rule 57AC(5)(a) for the purpose of production of goods by the job worker and to be returned within 180 days, observed as under:-                The Commissioner (A) has noted that the goods should be removed only for testing, repair or reconditioning or for any other purpose. He has understood the word 'any other' purpose to mean that it should be only for the purpose of testing, repair or reconditioning oblivious of the fact that the earlier phrase clearly indicates that the inputs or capital goods can be removed as such or after being part....

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.... so that they constitute one integrated unit together with the concerned unit cement factory, MODVAT/CENVAT credit on capital goods will be available to the assessee. On the other hand, if the mines are not captive mines but they supply to various other cement companies of different assessees, MODVAT/CENVAT credit on capital goods used in such mines will not be available to the concerned assessees under the appropriate MODVAT/CENVAT credit. 9. The Tribunal in the case of Pooja Forge Ltd. (supra) observed that capital goods were moved only between the appellant's own unit and that too for use in the manufacture of same final products. It does not involve any disposal or alienation of capital goods, which would warrant return/denial of MOD....