TaxTMI 
TaxTMI 
2024 (8) TMI 473
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....effective from 17.03.2012 stipulates that the if the capital goods on which cenvat credit has been taken are removed after being used, the manufacturer shall pay an amount equal to the Cenvat credit taken on the said capital goods reduced by specified percentage for each quarter of a year or part thereof from the date of taking the Cenvat credit. The relevant provisions read as below: - (ii) The provisions of third proviso to Rule 3(5) of Cenvat Credit Rules, 2004 as its existed upto 16.03.2012 read as under: (5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output services, as the case may be, shall pay and amount equal to the credit avalled in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9; Provided that such payment shall not be required to be made where any inputs [ or capital goods) are removed outside the premises of the provider of output service for providing the output service: Provided also that if the capital goods, on which CENVA....
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....ods is to be taken in two different financial years unless the same capital goods are cleared as such in the same financial year. If the capital goods are cleared after use in the factory, in terms of Rule 3 (5) / 3 (5 A), an amount equal to Cenvat credit has to be paid prior to 16.03.2012. Rule 3(5A) which was introduced w.e.f. 17.03.2012 provides that the amount of Cenvat credit availed shall be reduced by 2.5% per quarter of the year or part thereof as depreciation for calculation of the amount that has to be reversed when used capital goods are removed. According to department, the appellant had arrived the amount to be reversed / payable on removal of used capital goods by reducing 2.5% per quarter from the date of receiving the capital goods in the factory. The appellant thus arrived at the amount to be reversed by adopting the depreciation per quarter on the entire 100% of the amount from the initial date of credit availment. The appellant had availed only 50% credit in the first financial year and balance 50% was availed in the subsequent financial year. The provision states that the depreciation has to be calculated from the date of availing the credit. According to depart....
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.... December 2010 3 3 January 2010 to December 2010 4 4 January 2011 to December 2011 4 4 January 2012 to March 2012 1 1 April 2012 to June 2012 1 1 July 2012 and August 2012 0.5 1 Total usage period 15 14 Allowable Reduction as per quarter as per Rule 3 (5)/(5A) of CCR 2004 2.5% 2.5% 37.5% 35 Credit taken amount 2,03,466 2,03,466 Less: Allowable deduction 76,300 71,213 Balance Duty payable 1,27,166 1,32,253 Total Duty payable 2,59,419 Workings for differential duty payable Duty paid by LMW 2,54,333 Duty payable as per department workings 2,59,419 Difference duty payable -5,087 From the above table, it is evident that the difference in duty relates to the deductible percentage for the second 50%. The department has worked out 35% (for the second 50%) as against the allowable deduction of 37.5% calculated by appellant from the date of availing the credit which is 22.11.2008. 5. The Ld. Consultant argued that the Rule prescribes for calculating deduction from the date of taking the credit on the capital goods. In this case, appellant has initially availed 50% credit on 22.11.2008. The appellant is eligible for deduction from t....
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....capital goods are removed from the factory. The issue being purely interpretational, the invocation of extended period may be set aside. The Ld. Consultant prayed that the appeal may be allowed. 10. The Ld. AR Shri. Anoop Singh appeared and argued for the department. It is submitted that both Rule 3 (5) as well as Rule 3 (5A) of CCR 2004 are very clear that the relevant date for computation of depreciation for payment of an amount equal to the Cenvat credit availed on capital goods removed from factory after being put into use, is the date of taking the Cenvat credit. The show cause notice has clearly mentioned these provisions as well as Rule 4 (2) of CCR 2004. Rule 4 (2) provides that the Cenvat credit for capital goods received in the factory shall be taken only for an amount not exceeding 50% in the same financial year and balance may be taken in any financial year subsequent to the one in which capital goods have been received in factory. Therefore, it is clear that for computation of the amount of credit to be reversed on removal of used capital goods, the date of taking the credit and not the period for which the goods were in the factory has to be the basis. The ordinary m....
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....relevant provisions under Rule 3 (5) and Rule 3 (5A) and Rule 4(2) have been already reproduced above. 15. Rule 4(2) provides that an assessee can avail Cenvat credit of duty paid on capital goods only on 50% in the first financial year. If the capital goods are cleared after use in the factory, in terms of Rule 3(5) / 3(5A), an amount equal to the Cenvat credit availed as reduced by specified percentage is payable by the assessee. The entire controversy revolves around the date from which the deduction of 2.5% has to be applied. The appellant is of the view that since 2.5% deduction is allowed by way of depreciation for the used capital goods, they are eligible for deduction of 2.5% from the date on which the initial credit was availed. Thus, they have availed deduction of 2.5% on entire 100% of the capital goods. The department is of the view that since the appellant is eligible to avail credit of 50% of the duty in the first year and the balance 50% is availed only in the subsequent year, the appellant is not eligible for deduction of 2.5% on the 50% pertaining to the second year from the date of availing initial credit. The working given in the table above would bring out the ....