TMI Blog2010 (4) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants are bound to suffer irreparable loss and, therefore, in our considered opinion, the application deserves to be allowed and impugned order is stayed till the disposal of the appeal. - E/3318/2009-EX - 395/2010-EX(PB), - Dated:- 30-4-2010 - Justice R.M.S. Khandeparkar, President and Shri Rakesh Kumar, Member (T) REPRESENTED BY: Shri Anil Khanna, DR, for the Appellant. Shri Joy Kumar, Advocate, for the Respondent. [Order per : Justice R.M.S. Khandeparkar, President (Oral)]. - Heard ld. DR for the appellants and ld. Advocate for the respondent. 2. This appeal arises from the Order dated 1-10-2009 passed by the Commissioner (Appeals), Chandigarh. By the impugned order, the Commissioner (Appeals) has set aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hwari Sugars Ltd. v. CCE, Mysore reported in 2007 (217) E.L.T. 65 (Tri. - Bangalore) submitted that the materials on record including the show cause notice nowhere disclosed removal of the capital goods from the premises of the appellant and the lease of the factory and the capital goods would not amount to removal of the goods within the meaning of the said expression under Rule 57-S(i)(ii) of the said Rules. According to the id. Advocate, the Rule clearly requires actual and physical removal of the goods and in absence thereof it cannot be said that there is violation of the said Rules. Rule 57-S(i)(ii) of the said Rules clearly provides that the capital goods in respect of which the credit of the specified duty has been allowed under Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said expression "removed" in proper context, it would abundantly be clear that the said expression implies a situation whereby the control of the assessee over the capital goods is divested in one way or other so that the goods are not utilised by the assessee himself but are allowed to be utilised by the third party. Such utilisation of the goods would be either by way of sale or lease or transfer in some other manner whereby the control of the assessee over the goods gets transferred in favour of such third party. Any other meaning to the expression, "removed" would virtually defeat the very purpose of the said provision. No provision of law can be construed in a manner which would result in defeating the very object which is sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 8. The Karnataka High Court in Associated Cement Company case had held thus, "therefore, in our considered view though there had been no physical removal of power unit the above transactions between the assessee-company and M/s. Tata Electric Company certainly amount to nothing short of physical removal of the power unit of the assessee in respect whereof Modvat credit was availed by the assessee so as to attract the penal provisions of the said Act and the Rules. The said transaction of sale of power unit and simultaneous lease of premises are wisely resorted to by the assessee as a device to avoid the tax liability on it on the ground that the power unit was not physically removed from the premises of the assessee. Therefore, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured in their factory. Thus the Appellants No. 1 is liable to pay the duty on the impugned capital goods. A penalty is also imposable on them as they have not complied with the conditions specified in Rule 57-S for the utilisation of the capital goods. We do not find any substance in learned Advocate's submission that the Appellants No. 1, being not manufacturer, is not liable to pay duty. The Appellants No. 1 has availed of Modvat credit of the duty paid on goods and as such all the conditions of the Central Excise Rules in this regard would apply. The provisions of Rule 57-S, as mentioned hereinbefore, are very clear and specific that duty has to be discharged by the manufacturer who has taken the Modvat credit "as if such capita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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