2016 (11) TMI 475

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... with a Show Cause Notice dated 28/05/2008 wherein it was proposed to recover an amount of Rs. 11,17,731/- which was equal to the amount of Cenvat credit availed in respect of capital goods cleared after use under invoice No. 01 dated 22/05/2007 to their another Unit at Banglore. The said Cenvat credit was availed during the period from 1997-98 and the capital goods were cleared in 2007 and the said Show Cause Notice invoked provisions Rule 3(5) of Cenvat Credit Rules, 2004 and proposal for recovery of said amount was under Rule 14 of Cenvat Credit Rules, 2004. The said Show Cause Notice was adjudicated through Order-in-Original No. 27/Additional Commissioner/Noida/2009 dated 16/04/2009. The appellant had submitted before the Original Autho....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of Central Excise reported at 2012 (281) E.L.T. 714 (Delhi). Referring to the ruling in Para 13, 14 & 15 of the said ruling of Hon'ble High Court of Delhi, he has argued that the case is squarely covered by the case law and that the clearance of the said capital goods cannot be treated as removed as such of capital goods and same is not covered by the said Rule 3(5) of Cenvat Credit Rules, 2004. 4. The ld. Departmental Revenue has supported the Order-in-Appeal. 5. Having considered the rival contentions, I find that the present appeal is covered by the said ruling of Hon'ble High Court of Delhi, relied upon by the ld. Counsel for the appellant. The Hon'ble High Court of Delhi, has ruled in the Para 13, 14 & 15 of case law as follows:- "....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... goods lose their identity as capital goods only when after use over a period of time, the same has become in-serviceable and fit to be scrapped. The object of Cenvat Credit on capital goods is to avoid the cascading effect of duty. If even after use for a couple of years, the Cenvat Credit is required to be reversed then it would certainly defeat the object of the scheme. To avoid misuse of the scheme in the Rules, it has been provided that if the machines are cleared as such the Assessee shall be liable to pay duty equal to amount of Cenvat Credit availed. The machines which are cleared after utilization cannot be treated as machines cleared as such. With effect from 13/11/2007, a proviso has been added to Rule 3(5) of the Cenvat Credit R....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ssed. "14. Our attention was drawn to the judgment of the Bombay High Court in the case of Cummins India Limited Versus Commissioner of Central Excise, Pune-III, dated 23/07/2008. The High Court has affirmed the order of CESTAT, holding that the view that used capital goods cannot be said to be capital goods removed as such for the purposes of Rule 3(5), is in consonance with the law . This judgment of the Bombay High Court has been noticed by the Punjab & Haryana High Court in the above decision. 15. In the present case the appellant purchased the capital goods in the period between 2003 & 2005 and used them in its factory till they were sold to M/s Harsh International (Khaini) Pvt. Ltd. in June & July. Thus the capital goods were use....