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2016 (6) TMI 829 - AT - Central ExciseTransfer of business - reversal of cenvat credit - demand of duty on finished goods - transfer of entire Chain Division Business out of two divisions in toto, including plant, machinery, raw material work-in-progress and finished goods to a new company - Proceedings were initiated against appellant to recover such Cenvat credit attributable to the above items on the ground that the appellant is liable to reverse the credit on these goods (inputs, intermediate goods, final products and capital goods) as they are no longer in their ownership and control and as such on sale and transfer of Chain Division to a new legal entity, these items are deemed to have been cleared attracting the provisions of Rule 3 (5) of Cenvat Credit Rules, 2004. Held that:- the factual position as asserted by the appellant have not been rebutted by the original authority in any finding. Though, excise liability arises immediately on manufacture it is only on removal of goods the duty is to be discharged. We find that the duty on finished excisable goods is liable to be paid upon clearance and in this case, there is no physical clearance of excisable goods by the appellant. On creation of new joint venture company, the duty liability on clearance of these goods has admittedly been discharged by that company. Hence, we find the demand on appellant amounting to ₹ 1,33,25,607/- cannot be sustained. Reversal of cenvat credit - The Hon’ble Supreme Court in the case of J.K. Spinning and Weaving Mills Ltd., & Anr.[1987 (10) TMI 51 - SUPREME COURT OF INDIA] examined the scope of term removal. It was held that there can be no doubt that the word removal contemplates shifting of a thing from one place to another. In other words, it contemplates physical movement of goods from one place to another. The Tribunal in Dalmia Cements (Bharat) Ltd. Vs Commissioner of Central Excise, Tiruchirapalli reported in [2007 (11) TMI 211 - CESTAT, CHENNAI] following the ratio of the Hon’ble Supreme Court in the above decision examined the scope of application of Rule 3 (5) of Cenvat Credit Rules, 2004 - when there is no removal of goods under cover of invoice, as provided under rule 9, there is nothing in Rule 3 (5) to invoke the deeming fiction as insisted by the department. Demand is not sustainable - Decided in favor of assessee.
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