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2018 (6) TMI 178 - CESTAT MUMBAICENVAT credit - non-receipt of capital goods sent to job-worker - return within 180 days - Case of the department is that the appellant has not followed the procedure laid down under Rule 4(5) of CCR and also the capital goods so sent were not returned back within 180 days - demand of interest and penalty - Held that:- There is no dispute in the fact that the capital goods on which credit was availed were sent to their own unit No.2 for carrying out the production activity. Therefore, such removal is clearly covered under Rule 4(5)(a) as the appellant’s unit No.1 has admittedly issued the challan. In case of removal of capital goods under Rule 4(5), the capital goods should be returned back within 180 days. In the cases where capital goods are returned within 180 days, Rule 4(5)(a) provides that if there is a delay beyond 180 days, the assessee is required to reverse the credit, but subsequently, as and when the capital goods are received, they are entitled for the recredit. So, even if there is a delay and the capital goods were received back, the appellant shall be entitled for the credit and, therefore, no demand will exist. It has been accepted by appellant that all the records were not produced before the original authority regarding the movement of capital goods for the reason that the capital goods which were not returned within 180 days were subsequently received back after the visit of the officers. In such case, the return of the capital goods needs verification on the basis of the records to be produced by the appellant to the adjudicating authority - The adjudicating authority also needs to verify the payment of interest. Penalty on unit no. 2 - Held that:- Since the entire obligation to follow the procedure of Rule 4(5)(a) is on the sender of the capital goods, i.e. unit No.1, there is no reason to impose any penalty on unit No.2. Therefore, I set aside the penalty imposed upon unit No.2. Penalty u/r 26 on Director - Held that:- Since there is only a procedural lapse as the removal of capital goods has been recorded in the challan and it is well within the two units of the same company, the penalty on the director is also not sustainable. Appeal allowed in part and part matter on remand.
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