TaxTMI 
TaxTMI 
2023 (11) TMI 58
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....ile clearing the final product "transformer". Thus, the respondent had cleared the final product viz. transformer and paid duty on the final product as if the transformer oil has formed part of the value of transformer oil. The department was of the view that such transformer oil is cleared 'as such' and the respondent ought to have reversed the credit availed on the transformer oil as under Rule 3 (5) of Cenvat Credit Rules, 2004. Show cause notice dt. 29.11.2013 was issued for the period 2008-09 to 2012-13 (upto December 2012) alleging that the respondent has to reverse the credit availed on transformer oil and proposing to demand the wrongly availed credit along with interest and for imposing penalties. After due process of law, the original authority dropped the proceedings and held that the transformer oil is not cleared 'as such' by respondent as alleged in the SCN. Aggrieved by such order, the department is now before the Tribunal. 2. Ld. A.R Sri Rudra Pratap Singh appeared and argued for the Department. 2.1 It is submitted by the Ld. A.R that the respondent had cleared the transformer oil on which credit was taken by them. As the respondent has cleared the transformer oil....
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....ived by the adjudicating authority is erroneous. The meaning and the scope of the term 'cleared as such' was considered by the Tribunal in the case of Cummins India Ltd. - 2007 (290) ELT 911 (Tri.-Mumbai). The Tribunal while explaining the scope of removal of capital goods 'as such' as prescribed under rule held as under : "The plain and simple meaning of the expression "as such" would be that the capital goods are removed without putting them to use". It is submitted by the Ld. A.R that the above decision has been followed by the Hon'ble High Court of Bombay. In the present case also, the transformer oil is cleared 'as such' in barrels along with the transformer and therefore Rule 3 (5) of CCR 2004 would apply. 2.5 It is submitted by Ld. A.R that there is no provision under Rule 3 (5) of CCR 2004 providing for an exception for reversal of credit when inputs are cleared 'as such' when the value of the said inputs is included in the value of the final product. In such circumstances, the adjudicating authority ought to have held that the respondent-assessee has to reverse the credit taken on the input viz. transformer oil which has been cleared 'as such'. 2.6 In the instant case....
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....ontent. Once the HOC is successfully completed, the heated transformer oil is drained and directed to a filter tank via an Oil Filtration Plant. Subsequently, as the transformer oil gradually cools to ambient temperature (30 to 40 deg C9) it becomes suitable for reuse in the same transformer or other transformers. Testing Process: After the above process and before offering testing and inspection. Once again, we fill the tank with transformer Oil (in Ambient Temperature). Dispatch: After Testing, once the dispatch clearance provided by Customer, we start dismantling the Tank fittings. Meanwhile oil will be drained from the transformer and the same will be filled in the Barrels." 3.3 Learned counsel thus explained that the oil is filled in the transformer for the purpose of inspection and also to remove the residual moisture, if any. The said oil when cooled is reusable. While dispatching the transformer, the oil is filled in the transformer. Once the dispatch clearance is given by the customer, the oil will be drained from the transformer and the same will be filled in the barrels. The oil is used in the process of inspection and test which is part of manufacturing process....
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....y and whether contained in the final product or not, and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production. Explanation 1 : The high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2 : Inputs include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer." It was held by the Hon'ble High Court that Cenvat Credit Rules has been introduced to eliminate the cascading effect of tax on the final product. When the packing material is cleared along with the final product, it cannot be said that the credit availed on the packing material has to be reversed. Ld. Counsel prayed that the appeal, may be dismissed. 4. Heard both sides. 5. The issue that has to be decided is whether the respondent has to reverse the credit availed on transformer oil cleared along with final product.....