TaxTMI 
TaxTMI 
2015 (10) TMI 847
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....such" based upon the Valuation Rules. Coming to such conclusion, show-cause notice was issued to the appellants. The appellants contested the show-cause notice on merits as well as on limitation on the ground that the capital goods which were cleared by them were purchased outright from M/s. McCoy Bottling Company Pvt. Ltd. (M/s. McCoy in short) under asset purchase agreement and no CENVAT Credit was availed on the same by the main appellant on such capital goods. Adjudicating authority did not agree with the contentions raised by the appellants and confirmed an amount as ineligible of CENVAT Credit, interest thereof and also imposed penalties on all the appellants. Aggrieved by such an order, all the appellants preferred appeals before the first appellate authority. The first appellate authority concurred with the views of the adjudicating authority and rejected the appeals filed by the appellants. Hence all the appellants are before the Tribunal. 4. Learned Counsel appearing on behalf of the appellants took me through the show-cause notice and the allegations thereof. He would submit that it is undisputed that the main appellant had purchased the entire assets of the Company M....
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....ns of CENVAT Credit during the relevant period from the impugned order. He would submit that the appellant is required to pay Central Excise duty equivalent to CENVAT Credit availed by M/s. McCoy and the assets in the form of capital goods were transferred to the appellants. He would submit that it is the requirement of the provisions of Cenvat Credit Rules, 2004 that CENVAT Credit availed should be reversed when the capital goods are removed "as such". He would specifically read the provisions of Rule 57AB (1C) of the Central Excise Rules, 1944 as also the provisions of Rule 3(4) of the Cenvat Credit Rules, 2002. He would rely upon the decision of the Hon'ble Apex Court in the case of Macson Marbles Pvt. Ltd. vs. Union of India - 2003 (158) ELT 424 (S.C.), Hero Motors Ltd. vs. CCE - 2014 (310) ELT 729 (All.) and Autolite(India) Ltd. vs. Commissioner - 2003(154) ELT A169 (S.C.) for the proposition that the liability to pay excise duty dues will get transferred on transfer of industrial units and successor needs to discharge the said liability. 6. Learned Counsel in rejoinder would submit that the judgment of the Hon'ble Apex Court in the case of Macson Marbles Pvt. Ltd. ....
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....lity of M/s. McCoy in any form. It is also undisputed that the capital goods which were purchased by the main appellant from M/s. McCoy were procured by the said M/s. McCoy during the period 1997-98 and availed CENVAT Credit which is not disputed by the department; the said capital goods were put to use by M/s. McCoy and dutiable final goods were manufactured and cleared on discharge of Central Excise duty and also utilising the CENVAT Credit of the capital goods availed by M/s. McCoy. 7.2 On this factual matrix it has to be seen that whether the main appellant who have purchased the assets in the form of capital goods and cleared their machinery to their own sister concern is required to discharged CENVAT Credit availed by M/s. McCoy. Yet another fact is when the assets were purchased by the main appellant there was no balance of CENVAT Credit in the statutory records viz. RG-23 Part II of M/s. McCoy. Provisions of sub-Rule (1C) of Rule 57AB of Central Excise Rules, 1944 effective from 1.4.2000 reads as under: "(1C) When inputs or capital goods, on which credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amo....
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....Rules as reproduced here-in above puts onus on the manufacturer of the final product who has availed CENVAT Credit of the Central Excise duty paid on the capital goods. It is undisputed that the main appellant has purchased the capital goods from M/s. McCoy and had not availed benefit of CENVAT Credit on the capital goods by the said M/s. McCoy. In my considered view, the department should have demanded the Central Excise duty equivalent to CENVAT Credit availed on capital goods from M/s. McCoy, as having sold the assets they have parted with the capital goods on which CENVAT Credit was availed. 7.4 I find that ratio of the judgment of the Hon'ble Karnataka High Court in the case of Solectron Centum Electronics Ltd. (supra) is very pertinent in these cases. In that case, the High Court has considered the provisions of Rule 3(4) of the Cenvat Credit Rules, 2004 and after analyzing the entire provisions held as under:- "9. The next question is whether the assessee was not liable to pay any duty when capital goods after it is being used was removed to the EOU unit. 10. Rule 3 Sub-rule 4 of Cenvat Credit Rules, 2002 reads as under: "(4) When inputs or ....
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....vt. Ltd., in June and July, 2007. Thus the capital goods were used for a period of 2 to 4 years. They cannot, therefore, be stated to be sold "as such" capital goods. They were sold as used capital goods." 14. Therefore, it is clear, till the law was amended as on 13.11.2007 in respect of used capital goods, there was no liability to pay duty. In fact, this is evident from the fact that in Cenvat Credit Rules 2004, the proviso was added making the position clear which was not there in the earlier orders. The proviso reads thus: "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." The ratio as laid down by the High Court in a similar set of facts would be applicable in this case and I am bound by the said ratio. 7.5 As regards the reliance by the learned A.R. on the decision of the Hon'ble Apex Court in the case of Macson Marbles Pvt. Ltd. (supra) I find that in that case there was a ....