TaxTMI 
TaxTMI 
2009 (4) TMI 184
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....ndent, a manufacturer of Non-Alloys Steel Ingots from steel scrap, had purchased an induction furnace in the year 1994 and at that time had taken capital goods Cenvat credit amounting to Rs. 1,30,000/-. The furnace after use for about nine years was cleared in May, 2003 on payment an amount equal to duty on the transaction value i.e. 16% of Rs. 2,00,000/- = Rs. 32,000/-. The Department was of the view that since the capital goods in respect of which Cenvat credit had been taken were cleared as such, in terms of provisions of the Rule 3(4) of Cenvat Credit Rules, 2002, the entire amount of Cenvat credit originally taken was required to be paid back and on this basis, SCN was issued for demanding with interest an amount of Rs. 98,000/- i.e. d....
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....e the furnace had been removed as such, the entire Cenvat credit taken at the time of receipt should have been reversed and that in this regard, he relies upon the Tribunal (LB)'s judgment in the case of Modernova Plastyles Pvt. Ltd. v. CCE, Raigad reported in 2008 (232) E.L.T. 29 (Tri.-LB) wherein the Tribunal held that full reversal of capital goods Cenvat credit is required when the same are cleared as such with or without use. 2.2 Ms. Asmita Nayak, Advocate, ld. Counsel for Respondent pleaded that in this case the induction furnace had been received and installed in the Respondent's unit in the year 1994 and after about 9 years' used, the same was sold in an amount of Rs. 2 lakhs on which an amount of Rs. 32,000/- was paid; that ....
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....d in May, 2003 in an amount of Rs. 2 lakhs on which an amount equal to duty at the rate of 16% adv. i.e. Rs. 32,000/- was paid. According to Revenue at the time of clearance, in accordance with the provisions of Rule 3(4) of Cenvat Credit Rules, 2002, the entire amount of Cenvat credit should have been reversed. The Department's contention is based on the provisions of Rule 3(4) of the Cenvat Credit Rules, 2002 as the same existed during the period of dispute, according to which "when inputs or capital goods, on which Cenvat credit has been taken, are removed as such from the factory, the manufacturer of final products, shall pay an amount equal to the credit available in respect of such inputs on capital goods or inputs". The Respondent'....
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....iginally taken. The question now arises as to whether during the period from 1-3-03 to 12-11-07 when the Rule 3(4) of Cenvat Credit Rules, 2002/Rule 3(5) of Cenvat Credit Rules, 2004 provided for payment of an amount equal to the Cenvat credit taken when Cenvated inputs or capital goods are removed as such, whether the amount equal to the Cenvat credit originally taken will be required to be paid even if the capital goods are cleared after use for some time. Unlike inputs, which get consumed hundred percent when the same are taken up for use in or in relation to the manufacture of finished products, capital goods get used up over a period of time. The capital goods lose their identity as capital goods only when after use over a period of ti....