AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 267
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....machinery were leased by the assessee for consideration to another company? 2. Whether on such lease the assessee shall have to pay an amount equal to the credit availed in respect of such inputs or capital goods in terms of Rule 3 (5) of the Cenvat Credit Rules, 2004, deeming the transfer of the right to use the said power plant comprising the land, building, plant and machinery to another company as removal as such? 3. Whether the power plant and the inputs, capital goods and input services used in the said power plant could be said to be an integral part of the factory of the assessee to be eligible inputs, capital goods and input services as defined in Rule 2 (a), Rule 2 (k) and 2 (1) of the Cenvat Credit Rules, 2004, even after the lease resulting in transfer of the power plant from the possession and use of the assessee to another company? C.M.A. No.3421/2008 1. Whether the inputs and capital goods used in a power plant and on which Cenvat credit of duty had been taken could be deemed as removed as such in terms of the provisions of Rule 3 (5) of the Cenvat Credit Rules, 2004, when the right to use the said power plant along with the land, building, plant and machinery we....
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....ermination of the lease, KPPL were to hand over physical possession of the property to DCL. The lease further provided that it was the liability of KPPL to obtain all consents, licences, approvals, etc., as are necessary for the execution, validity and enforceability of the lease deed and for the operation of the power plant and also to keep them effective in force during the lease period. It further provided that DCL was not liable for any loss, damage or claim of any kind arising from the operation/maintenance of the power plant. KPPL were liable to maintain proper insurance for the power plant against all risks including fire, lightning, explosion, earthquake, storm, flood, theft, etc. DCL also entered into a power purchase agreement with KPPL on 24.3.05 according to which the fuel required for the power plant would be supplied free by DCL and the power generated by the plant would be supplied to DCL by KPPL for which DCL would pay at the prescribed tariff. The power purchase agreement further provided that KPPL should not supply power to any third party without prior written consent of DCL. It also stipulated the terms and conditions for supply of fuel by DCL and for operation ....
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.... raised in the show cause notice were denied by DCL and it contested the matter. After adjudication of the matter, the adjudicating authority confirmed the demand to the extent of Rs. 6,97,31,863/-, appropriated the payments already made by DCL towards the above demand and levied interest at appropriate rates and a penalty of Rs. 12.5 Lakhs under Section 11AC of the Central Excise Act read with Rule 15 of the Cenvat Credit Rules, 2004, was levied on DCL. The adjudicating authority, viz., the Commissioner, took the view that the power plant and the land on which the power plant is situate has been transferred by way of lease deed to KPPL and, therefore, the power plant ceased to be part of the assessee and stood excluded from the factory premises and, thereby, provisions of Rule 3 (5) of the Cenvat Credit Rules, 2004, is attracted. 6. Aggrieved against the said order, the assessee/2nd respondent as well as the appellant/Revenue pursued the matter before the Tribunal, vide separate appeals. The assessee, before the Tribunal, raised the following contentions :- "a) The Cenvat Credit validly availed and utilised by them cannot be denied on the basis of a subsequent lease of the power....
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...., viz., KPPL, w.e.f. 15.3.05 for generation of electricity and supply thereof to the assessee at the prescribed rates. The moot question that arose for consideration before the Tribunal was "whether such a leasing of the power plant by DCL to KPPL under the lease agreement could be termed as 'removal of capital goods' as such from the assessee's factory, enabling the department to make the demand as aforesaid?" 8. The Tribunal, on consideration of the entire gamut of facts and referring to another decision of its own in the case of BLIT Industrial Packaging Company Ltd. - Vs - CCE, Salem (2007 (216 ELT 217 (Tri. Che.)) where a similar provision, viz., Rule 3 (4) of the Cenvat Credit Rules, 2003, was considered and held in favour of the assessee, decided the present case holding that there was no physical removal of capital goods as such from the factory. There was no invoice issued as envisaged under Rule 11 (1) of CCR, 2002 read with Rule 3 (5) of CCR, 2004, for clearance of any capital goods as such from DCL factory. The Tribunal held that the provisions of Rule 3 (5) of CCR, 2004, is not applicable to the instant case. In such view of the matter, the issue was answe....
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....r; (II) inputs or capital goods as such; (ii) an importer; (iii) an importer from his depot or from the premises of the consignment agent of the said importer if the said depot or the premises, as the case may be, is registered in terms of the provisions of Central Excise Rules, 2002; (iv) a first stage dealer or a second stage dealer, as the case may be, in terms of the provisions of Central Excise Rules, 2002; or (b) a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his factory or depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty leviable under section 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short -levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provi....
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....he Commissioner of Central Excise, on receipt of a request from the said manufacturer. (2) The invoice shall be serially numbered and shall contain the registration number, address of the concerned Central Excise Division, name of the consignee, description, classification, time and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value of goods and the duty payable thereon. Provided that in case of a proprietary concern or a business owned by Hindu Undivided Family, the name of the proprietor or Hindu Undivided Family, as the case may be, shall also be mentioned in the invoice. (3) The invoice shall be prepared in triplicate in the following manner, namely :- (i) the original copy being marked ORIGINAL FOR BUYER. (ii) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER. (iii) the triplicate copy being marked as TRIPLICATE FOR ASSESSEE. (4) Only one copy of invoice book shall be in use at a time, unless otherwise allowed by the Assistant Commissioner of Central Excise, or the Deputy Commissioner of Central Excise, as the case may be, in the special facts and circumstances of each case. (5) The owner or working partner o....
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....le 3 (5) of the Cenvat Credit Rules, 2004, the Department cannot attribute the cost of removal in a transaction covered by a lease agreement. 14. On facts, the Tribunal went in detail into the lease deed, the terms and conditions of the lease and the various clauses to come to the conclusion that there was no removal of goods as such from the premises of DCL and, therefore, held that the order of the adjudicating Commissioner is bad. The reasoning of the Tribunal, in the considered opinion of this Court, is a well considered reasoning and this Court finds no reason to differ with the view of the Tribunal, as we have considered the contentions and findings in extenso. The decisions relied on by the Tribunal in arriving at the above decision is also well founded and, therefore, this Court does not find any reason to interfere with the same. 15. On the questions of law framed above, at the outset, it is brought to the notice of this Court that the decision of Majestic Auto case (supra), which was relied upon by the jurisdictional Commissioner has since been reversed by the Allahabad High Court in Hero Motors Ltd. - Vs - Commissioner of Central Excise, Ghaziabad (2014 (310) ELT 729 (....