TaxTMI 
TaxTMI 
2024 (9) TMI 113
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....-002-APP-838-20-21 dated 23.12.2020 passed by learned Commissioner (Appeals) CGST, Noida. 2. The facts of the case in brief are that during the course of audit of the records of the Appellant by the Audit Officers from the office of AGUP, it was noticed that during the period 2007-08 the Appellant had sold Plant & Machinery and equipment for consideration of Rs.1,64,61,000/- attracting the Central Excise duty amounting to Rs.27,12,773/-. As per Rule 3(5) of the CCR, 2004, the Appellant was required to pay equal amount of Cenvat credit taken on capital goods, if these goods are removed as such and such removal shall be made under the cover of documents as prescribed under Rule 9 of CCR, 2004. The Department vide various letters alleged that removal of Plant & Machinery without reversal of corresponding credit and accordingly sought documentary evidence including a certificate from the Chartered Accountant to support the Appellant vide letter dated 30.11.2011 furnished the same and provided a detailed break-up of Plant & Machinery and Equipment sold during the relevant year as appearing in Schedule 15 of the Audited Annual Report. A show cause notice [SCN] dated 22.12.2011 was issue....
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....s in the first place and therefore the question of reversal does not arise. 6. He further submits that Schedule 6 of the Balance sheet filed by Berger Paints gives detail of Fixed Assets of all three divisions combined i.e. including the Appellant Division. The Appellant furnished the Chartered Accountant's certificate to show the bifurcation of the assets sold divisions-wise. Hence, the demand cannot be made from the Appellant's present division. Rule 3(5) of the Credit Rules is in any case not applicable to the present case as the condition of removal 'as such' is not fulfilled. The goods which were sold by the Appellant during the relevant period has been put to use to the extent of their useful life and hence cannot be said to be removed 'as such' and hence will not get covered under the said Rule as it stood during the impugned period. The Department in the SCN or otherwise has not disputed that the "used goods" were sold. The demand cannot be made on the transaction value of the used goods. Reliance is placed on the following decisions: a. Harsh International (Khaini) Pvt. Ltd. v. CCE reported at 2012 (281) E.L.T. 714 (Del). b. Crompton Greaves Ltd. Vs. Commissioner of C....
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....alance Sheet. Block of assets is in respect of which a particular rate of depreciation is applicable. Generally, the written down value of the machinery is reduced from the block of assets in schedule 6 and the profit and/or loss earned or incurred respectively on sale of assets is shown separately in the profit and loss account. Thus, both the certificates are not comparable to this extent, but both the certificates established the fact that the sale was made from different divisions. Further, the sale value because of these reasons cannot match with the amount of deletion in the schedule 6 of the Balance Sheet. For example, if an asset is purchased on 01.04.2003 for Rs.1,000/-, which is subjected to depreciation @ 25% on written down value method and the same is used for 04 years, then the written down value will be as follows on 01.04.2007: Written down value on Rate of depreciation depreciation WDV in the end of FY 1.04.2004 1000 25% 250 750 1.04.2005 750 25% 188 563 1.04.2006 563 25% 141 422 1.04.2007 422 Thus, if such asset, which is used and old, is sold on 30.04.2007 at Rs.450/-, then a profit of Rs.28/- wil....
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....ds are removed outside the premises of the provider of output service for providing the output service and the capital goods are brought back to the premises within 180 days, or such extended period not exceeding 180 days as may be permitted by the jurisdictional Deputy Commissioner of Central Excise, or Assistant Commissioner of Central Excise, as the case may be, of their removal." 11. I further find that the facts of the present case are squarely covered by the judgement of the Hon'ble High Court of Delhi in the case of Harsh International (Khaini) Pvt. Ltd. vs. Commissioner of Central Excise reported as 2012 (281) E.L.T. 714 (Del.) the relevant paragraphs are as under:- "3. In the course of the scrutiny of the assessee's records, it was found by the Central Excise Authorities that the appellant had availed of the credit under the Cenvat Credit Scheme on capital goods. The appellant was asked to furnish the details of the credit as required by Rule 3(5) of the Cenvat Credit Rules, 2004, hereinafter referred to as the "Rules". On verification of the detailed furnished by the appellant, it was noticed by the Central Excise Authorities that the appellant-assessee had removed al....
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.... has been taken, are removed after being used, the manufacturer will be liable to pay a reduced amount of the Cenvat credit taken on the capital goods, such reduction being 2.5% for each quarter or a year or part thereof from the date of taking the Cenvat credit. Therefore, prior to the said date it did not matter that the capital goods were removed after being put to use, because even after being put to use, they still retained their character as capital goods. 6. The CCE also referred to certain decisions of the CESTAT in support of his view that even though the capital goods were removed after being used, they still retained their character as capital goods "as such" within the meaning of Rule 3(5) of the Cenvat Credit Rules. He, therefore, held that by not reversing the Cenvat credit the appellant committed a violation of the aforesaid Rule. He also noted the amendment made to the Rule with effect from 13-11-2007 by which a proviso was added to the Rule which gave a concession in the case of capital goods removed after being used. According to the CCE in cases of removal of capital goods from the factory prior to 13-11-2007, central excise would become payable as per rule 3(....
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....see's interpretation, but the Tribunal felt bound by the decision of the Larger Bench (supra) and was unable to give effect to the assessee's submissions. The Tribunal ultimately concluded the appeals against the assessees in the following manner :- "19. Once the provision of law clearly required the appellants to pay an amount equal to the credit availed in respect of capital goods which were removed as such, and that the same was required to be paid at the time of such removal of the goods, and admittedly the appellants having not complied with the said obligation, the consequences provided under the statutory provisions are bound to follow. It cannot be held in such circumstances that the removal of the goods was not with any intention of avoiding the revenue liability. As in case of claim of exemption from payment of duty, the burden lies upon the assessee to establish that the assessee falls within the four corners of the provision granting the exemption, similarly in a case of non-payment of duty or discharge of any revenue liability, it is for the assessee to establish that he or she was not liable to discharge such revenue liability for valid reasons. Mere contention that....
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....d on 13-11-2007. However, we note that the view taken by the Tribunal in 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 sa....
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....as such" for the purposes of Rule 3(5), "is 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. 16. As a result, there is no question of paying any penalty under Section 11AC of the Act or any interest on the duty. Thus the appellant is not liable to the payment of duty, interest or penalty. The substantial question of law is answered in the negative, in favour of the appellant and against the Central Excise Department." 12. In the above case the Hon'b....