TaxTMI 
TaxTMI 
2022 (7) TMI 653
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....on 11A of the CEA, 1944] and order recovery thereof. B. The assessee is also ordered to pay interest in terms of Rule 14 of the CESVAT Credit Rules, 2004 read with the then section 11AB of the CEA, 1944. C. I also impose penalty of Rs. 86,55,477/- (Rupees Eighty six lakhs fifty five thousand four hundred seventy seven only) on the assessee M/s Crompton Greaves Ltd. (Large Machine Division) in terms of rule 15 of the CCR, 2004 read with the then section 11AC of the CEA, 1944. I also give the assessee the option of payment of 25% of the penalty as available under the then section 11AC if they pay the duty confirmed within thirty days of the receipt of this order along with the interest u/s 11AB of the CEA, 1944. Needless to mention the reduced penalty of 25% also needs to be paid within the period of thirty days as mentioned in the then in the then section 11AC of the CEA, 1944. D. The assessee M/s Crompton Greaves Ltd. (Large Machine Division) is directed to pay the adjudged amounts forthwith." 2.1. Appellant is registered manufacturer of Electric Motors and Generators and parts thereof falling under Chapter 85 of the CETA, 1985 and availing Cenvat Cred....
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.... furnished revised statement but did not furnish the documentary evidence on the basis of which they have shown the original cost/value of the capital goods cleared and also did not furnish the purchase invoices in respect of the said capital goods; also did not clarify as to which provisions of the CEA, 1944 and the Rules framed thereunder they had arrived at the Assessable value and discharged duty. 2.4 Thereafter, vide their letter dated 26.05.2008 appellant furnished statement showing the original cost of machineries/capital goods cleared, as available in their SAP system. 2.5 Since the appellant did not furnished any documentary evidence in support of their contention that they have not availed any Cenvat/Modvat credit on these capital goods, revenue was of the view that appellant have to pay an amount equal to the credit availed in respect of such capital goods and which would be equivalent to the duty payable on the basis of original cost/value of the capital goods in question as shown in the purchase invoices. Based on the statement furnished by the appellant vide their letter dated 26.05.2008, the differential amount of Central Excise duty of Rs.86,55,477/- was worke....
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....e said capital goods in 1976 after payment of excise duty. Thus there was no occasion for them to take Modvat/ CENVAT credit of the excise duty paid by them as the scheme of MODVAT Credit was introduced in respect of inputs only in 1986 and extended to Capital Goods in the year 1994. • They had correctly cleared the said capital goods from their Kanjur factory after reversing/paying excise duty on the said capital goods at their depreciated/written down value. • The matter is revenue neutral, as whatever duty that the Appellant may have paid/reversed on the said capital goods was very much available to them by way of Cenvat credit when the said capital goods entered their own factory at Mandideep, Madhya Pradesh. • He relied on the following decisions in support of his contentions: • Moser Baer India Ltd. [2010 (250) E.L.T. 79 (Tri. - Del.)] • Cummins India Ltd. [2007 (219) E.L.T. 911 (Tri - Mumbai)] • Rogini Mills Ltd. 2011-TIOL-05-HC-MAD-CX • Rajalakshmi Paper Mills Ltd. 2009 (234) E.L.T. 536 (Tri. - Chennai) • Trinity Auto Components Ltd. [2010 (257) E.L.T. 548 (Tri. - M....
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....2.53%, 62%, 46%, 65.43% and also 93.60% etc. The differential duty has been computed by adopting the Original cost/value and calculating the differential duty at BED @16% and Edu. Cess @2%. 15. The very fact that the assessee chose to pay Central Excise duty on the depreciated value at the time of removal of these "used capital goods" explains the intention on their part for not following the correct and legal procedures. Obviously, had they been so sure about the fact that all these machines belonged to the pre-Modvat/Cenvat era, they could have merely removed these "used capital goods" from their factory under a challan more so since they were not their "manufactured final products". Having not chosen to do the same, the assessee resorted to the "depreciation method" for arriving at the assessable value of these capital goods. 16. It also needs mention that the Annexure "A" to the demand 'notice, as mentioned in the preceding paragraphs, shows that in some cases the assessee has chosen to have "0% depreciation". This very fact clearly indicates that these capital goods were not old so as to have any depreciation in value. I, therefore, do not find any merits....
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....leared on the transaction value as per Notification 6/2001-C.E. dated 1-3-2001 and w.è.f. 13-11-2007 vide Notification 39/2007-C.E., the concept of reversal of proportionate credit has been reintroduced. If the expression "as such" is held to cover only unused or new capital goods, manufacturers who wish to remove used capital goods to job workers' premises for testing, repairing reconditioning etc., would not be able to avail of the facility under Rule 4(5)(a). Further, if the expression was such" is interpreted to mean new or unused capital goods, then the question of testing, repairing or reconditioning them does not arise and the terms 'testing', 'repairing' and 'reconditioning' would become redundant, and any interpretation which results in rendering any portion of rule or legislation redundant, should be avoided, as held by the apex court in Amrit Paper v. CCE, Ludhiana - 2006 (200)ELT 365 (S.C.) and Rajesh Kumar Sharma v. UOI - 2007 (209) ELT 3 (S.C.). 3. The decision of the Tribunal in Cummins India Ltd. v. CCE, Pune-III - 2007 (219) ELT 911, which has been upheld by the Bombay High Court's order dated 23-7-2008 in ....
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....ce of demanding duty on the original value of the capital goods is proper in law in the facts and circumstances of the case. 19. Coming to the plea of the demand having been hit by the bar of limitation, it is my considered view that in the era of self- assessment, when full faith and trust have been reposed in the assessee, there is a clear case of total breach of trust and fraud played on revenue. If material particulars are not being submitted by the assessee justifying their action of payment of duty on depreciated value, it is incumbent on the department to re-work the duty liability based on the original value of machinery and in the event of such a non disclosure in the returns, the same amounts to suppression of material facts with intention to evade payment of duty and thus extended period has correctly been invoked. Also such an evasion of duty with clear malafide intention also attracts the provisions of mandatory penalty and mandatory interest in terms of the then sections 11AC and 11AB of the CEA, 1944. 20. Revenue neutrality also cannot come to the rescue of the assessee. Once the same is upheld then every case of recovery of non-payment/short paymen....
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...."Interpretation of statutes - Intention of legislature - In Court of law or equity, what legislature intended to be done or not to be done can only be legitimately ascertained from what it has chosen to enact either in express words or by reasonable and necessary implication - Where legislature clearly declares its intent in scheme of a language of statute, it is duty of Court to give it full effect without scanning its wisdom or policy, and without engrafting, adding or implying anything which is not congenial to or consistent with such express intent of legislature - Hardship or inconvenience cannot alter meaning employed by legislature if such meaning is clear on face of statute - If statutory provisions do not go far enough to relieve hardship, remedy lies with legislature and not in hands of Court. (para 26)" 4.3 Appellants have during the course of arguments have submitted a timeline in respect of the procurement of the Capital goods by them and the clearance of same by them to their Mandideep unit. The time line submitted is reproduced below: Sr. No. Date Particulars Reference 1 1976 Large Machine Division of the Appellant started its operations at Ka....
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..../reversed excise duty upon the same based upon the depreciated/written down value of the said capital goods. 7 Nov 2005 to Oct 2006 once the said capital goods were delivered to the Appellant's said other factory at Mandideep, Madhya Pradesh, the Appellant availed the Cenvat Credit at the excise duty paid/reversed by them when they were removed from the Appellant's Kanjur factory. 8 Nov 2005 to Oct 2006 at all material times the Appellant had fully informed the Department about the payment/reversal of excise duty on the depreciated value of the said capital goods in the monthly returns filed by them during the said period. The Department therefore had full knowledge of the removal of the said capital goods and payment/reversal of excise duty there upon at their depreciated value. This is also evident from the correspondence referred in the show cause notice, viz. the Appellant's letter dated 08.09.2006 referred in para 2 of the show cause notice. From Ex A pg. 18 to Ex E pg.23 9 08.08.2006 to Nov, 2010 correspondence ensued between the Department and the Appellant on the to issue 10 12.22.2010 Show c....
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....ny duty/ reversal of amount. Is it mandatory in any law that the appellants were required to maintain the invoices of the capital goods procured by them some thirty years. All the capital goods which have been received by the appellants would have been received by the appellant at appropriate time and installed in their factory. These capital goods are duly reflected in the balance sheet and the written down value of these capital goods get reflected in the balance sheet as capital assets. It is not even the case of the revenue the capital goods which have been cleared by the appellants do not form the part of the capital assets on the basis of their written value. No evidence or even the averment has been made in the show cause notice or the impugned order that these capital goods are the one against which the appellant had taken MODVAT/ CENVAT Credit and have been cleared by them as such without being put into use. In the view of this we are not in agreement with the findings recorded by the adjudicating authority in this regard. 4.5 Issue in dispute vis a vis the value which should be taken for determination of the amount to be reversed under Rule 3 (5) of the CENVAT Credit R....
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....r new unit, where it was used in the manufacture of dutiable final product. Therefore, the appellant is eligible to avail the credit which is demanded in the present case. The entire exercise is revenue neutral and is futile. Therefore, the demand of duty and penalty are not warranted on the ground of revenue neutrality." b. In case of Cummins India Ltd, tribunal held as follows: "2. The dispute in the present appeal relates to the issue as to whether the appellants were required to pay duty at the assessable value of the capital goods or they were required to reverse the quantum of credit originally availed by them at the time of receipt of capital goods. Both the authorities below have held that since the capital goods have been cleared by the appellant, they are required to reverse the original quantum of credit availed by them in terms of provisions of Rule 3(4) of Cenvat Credit Rules, 2002. 3. After hearing both the sides I find that the said rules require reversal of credit in respect of the capital goods which are removed "as such". The plain and simple meaning of the expression "as such" would be that the capital goods are removed without putting ....
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....the said capital goods reduced by 2.5% for each quarter of a year or part thereof from the date of taking the Cenvat credit. The Board's Circular dated 1-7-2002 stated that the capital goods on which Cenvat credit had been taken or cleared under Rule 3(4), the Manufacturer would be required to pay an amount equal to the duty at the rate prevailing on the date of clearance and on the value determined under the provisions of Section 4 of the Central Excise Act and the depreciation as per the rates fixed in the Board's Letter dated 26-5-1993 should be allowed. 7. On a conjoint reading of Rule 3(4) with the provision added to Rule 3(5) with effect from 13-11-2007, the Board's Circular dated 1-7-2002 along with Board's letter dated 26-5-1993, it is quite clear that the inputs or capital goods when disposed of after putting it into some use over a period of time, then the assessee would be entitled to reverse whatever Cenvat Credit availed on the value to be assessed on the date of such subsequent sale as capital goods. Such a conclusion by relying upon the above referred to Board's Circular and the letter as well as the addition of proviso to Rule 3(5) with effect from 13-11- 2....
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....e that the Larger Bench while dealing with the scope and ambit of the expression "as such" has observed that the said expression has to be interpreted as commonly understood, which is in the "original form" and "without any addition, alteration or modification" and that the said expression has no connection with the goods as being new or unused or used, however, it is to be noted that the Larger Bench was dealing with the said expression as used in Rule 4(5)(a) of the said rules and the said rule reads thus :- "The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, reconditioning or any other purpose, and it is established from the records, challans or memos or any other document produced by the assessee taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred and eighty days, the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital good....
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....the impugned order is that the words "as such" appearing in Rule 3(5) also took in the used capital goods. Thus according to the Tribunal, used capital goods when removed continued to remain capital goods "as such" and therefore the Cenvat credit availed of on the capital goods has to be repaid. Thus the substantial question of law raised in the appeal is whether used capital goods on which Cenvat credit was availed are capital goods removed "as such". The words "as such" have been interpreted by the Punjab & Haryana High Court in Commissioner of C. Ex., Chandigarh v. Raghav Alloys Ltd., 2011 (268) E.L.T. 161 (P & H) = 2012 (26) S.T.R. 87 (P & H) to refer to "unused" capital goods and do not take in the used capital goods. It has been observed as under :- "8. We have heard arguments of both the Ld. Counsel. The Tribunal has rightly noted that unlike inputs, which get consumed 100% with the same are taken up for use in relation to manufacture of finished goods, capital goods are used over a period of time. The capital 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....
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.... 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 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. 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. We agree with the Bombay and Punjab & Haryana High Courts and hold that the appellant was not liable to pay excise duty in accordance with Rule 3(5) when it removed the used capital goods and consigned them to M/s. Harsh International (Khaini) Pvt. Ltd." 4.7 Larger Bench of Tribunal has in case of Navodhaya Plastics [2013 (298) E.L.T. 541 (Tri. - LB)], held as follows: "10. The use of capital goods is to spread over many years. A decision to the effect that assessees can bring in capital goods, use it for a few days and then remove it without reversal of any Cenvat credit taken is not consistent with the overall scheme of Cenvat credit ....