2017 (1) TMI 22

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....he other in Madhya Pradesh. The appellants purchased DG Sets in February, 97 and installed the same in their factory in the state of Karnataka and were using the same. Later on the same were shifted to their unit at Imlai in Madhya Pradesh, where the same were installed on 03.06.2002 and used. There was fire accident on 08.11.2003 at the DG house in Imlai unit and DG set was destroyed. The applicant received a total compensation of Rs. 4,45,91,991/- form Insurance Agency out of which a sum of Rs. 4,29,48,084/- related to destroyed capital goods on which credit had been availed. A show cause notice (SCN) dated 09.01.2008 was issued proposing recovery of cenvat credit in respect of capital goods on the ground that the same were deemed to hav....

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....t be received and used in the factory of the manufacturer of final products. However, no duration/ time-limit of the said usage is specified under the Credit Rules for satisfying the said condition. In the present matter, the capital goods in question were used in the Appellants s factory for a period of almost 18 months, before these were damaged/destroyed in fire. These capital goods were neither cleared as such nor removed on sale. There is no provision in the Credit Rules for reversal of credit in the event they are damaged/destroyed in fire.   iii. The question of reversal of credit on the capital goods destroyed in fire came up for consideration before the Hon ble Tribunal in the case of Biopac India Corporation Ltd. vs. CCE, V....

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....oods over a period of time, when the same came to be destroyed in the fire, it cannot be stated that the said goods had not been used in the manufacture of final products so as to call for reversal of the cenvat credit availed in respect of the same. In the circumstances, no infirmity can be found in the approach of the Tribunal in holding that there was no justification for reversal of modvat credit in respect of the capital goods which had been fully destroyed in the fire. 6.1 Hon ble Karnataka High Court in the case of Tata Advanced Materials Ltd.(supra) in para 6 of the decision observes as under: 6. Therefore, it is clear that there is no provision in the rules which provides for a reversal of the credit by the Excise Authorities ex....