2017 (3) TMI 1076

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....thereof falling under Chapter 9403 70 00 and 3923 10 10 of the 1st Schedule to the CETA 1985. The appellant procured four capital goods vide invoice/bills of entry No. 064/25.10.2016, 362322/19.11.2001, 754019/07.02.2003 and 42/29.1.2002 and availed the benefit of CENVAT credit of eligible duty under CENVAT Credit Rules of Rs. 17,79,098/-. These capital goods were received in the factory of the appellant and were used by the appellant for manufacture of dutiable excisable goods for nearly 5 years and thereafter cleared the above used capital goods vide invoice No. 23/14.04.2005, 153/20.07.2005, 168/01.08.2006 and 520/05.03.2007 without payment of duty for reversal of CENVAT credit since the said capital goods were not manufactured by the ap....

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....i.-Mum.) which has held that the interpretation given by the authorities below would lead to absurd results if an assessee is required to reverse the credit originally availed by them at the time of receipt of the capital goods, when the said capital goods are subsequently removed as old, damaged and unserviceable capital goods. This would defeat the very purpose of grant of facility of modvat credit in respect of capital goods and would not be in accordance with the legislative intent and the same view was held by the Tribunal in the case of Madura Coats P. Ltd. Vs. CCE, Tirunelveli 2005 (190) E.L.T. 450. He further submitted that Hon'ble High Court of Bombay has affirmed the said view as reported in 2009 (234) ELT A120 (Bom.) holding that....

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....osition clear which was not cleared in the earlier provision. 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 above said provision was added by a Notification No. 39/2007 dated 13.11.2007. Therefore prior to 13.11.2007 no duty was payable in respect of capital goods which was used before it is removed. In the present case also, the capital goods was imported on 14.03.2006 and was used for a year and then cleared on 10.04....

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....e of receipt of the capital goods, when the said capital goods are subsequently removed as old, damaged and unserviceable capital goods. This would defeat the very purpose of grant of facility of Modvat credit in respect of capital goods and would not be in accordance with the legislative intent. 13. The Delhi High Court in the matter of Harsh International (Khaini) Pvt. Ltd. v. Commissioner of Central Excise reported in 2012 (281) E.L.T. 714 (Del.), after referring to the various judgments held as under : "In the present case the appellant purchased the capital goods in the period between 2003 and 2005 and used them in its factory till they were sold to M/s. Harsh International (Khaini) Pvt. Ltd., in June and July, 2007. ....