TMI Blog2012 (12) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital goods on which the Cenvat credit was availed after use on payment of excise duty on transaction value would not attract Rule 3(5) of the Cenvat Credit Rules, 2004. - E/2131/2011 - A/471/2012-EX(BR)(PB) - Dated:- 24-4-2012 - Justice Ajit Bharihoke, Shri Rakesh Kumar, JJ. REPRESENTED BY : S/Shri B.L. Narasimhan, and Hemant Bajaj, Advocates, for the Appellant. Shri Bharat Bhushan, AR, for the Respondent. [Order per : Justice Ajit Bharihoke, President]. This appeal is preferred against the order of Commissioner (Appeals), dated 23-5-2011 whereby he reversed the order-in-original dropping the proceedings based upon the show cause notice no. C.No. V(55)ADJ-II/JPR-II/453/07/9220 dated 11-5-2009. 2. Briefly state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal and the Commissioner (Appeals) vide impugned order took the view that Rule 3(5) of the Cenvat Credit Rules, 2004 was attracted. Thus, he allowed the appeal of revenue and confirmed the demand of Rs. 6,63,040/- with interest and also imposed the penalty of Rs. 12,51,200/- with the observation that if the demand with interest and 25% of the penalty amount is paid within 30 days of the receipt of the order, 75% of the penalty shall stand waived in terms of the provisions of Section 11AC of the Act. 5. Shri B.L. Narasimhan, Advocate appearing for the appellant has submitted that the impugned order made by the Commissioner (Appeals) is not sustainable in law as it is passed ignoring the fact that the capital goods in question were used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t after a user of about ten years or they were required to reverse the Cenvat credit availed by them at the time of receipt of capital goods. The adjudicating authority have held that since the capital goods have been cleared by the appellant after a long user he has rightly paid excise duty on the assessable value of the capital goods at the time of sale. The Commissioner (Appeals) disagreed with the finding of the adjudicating authority and concluded that the appellant were required to pay the excise duty equivalent to the Cenvat credit availed in view of Rule 3(5) of Cenvat Credit Rules. 8. It is undisputed that the capital goods i.e. D.G. Sets, Water Heat Recovery Equipment were purchased by the appellant in the year 1996 and 1997 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case may be, of their removal. 7. On bare reading of the aforesaid provision it would be seen that these provisions are applicable only when the capital goods on which Cenvat credit availed by the assessee are removed as such . In our considered view the meaning of the expression removed as such would be that the capital goods after availing the Cenvat credit are removed from the premises of the assessee without putting them to use or putting them for use for a very small duration with a view to defeat the interest of revenue. In the instant case, admittedly, the capital goods i.e. D.G. Sets and Water Heat Recovery Equipment were disposed of in the market after putting them to use for a period of 9-10 years. Thus, it cannot be said tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch. With effect from 13-11-2007, a proviso has been added to Rule 3(5) of the Cenvat Credit Rules providing that if the capital goods on which Cenvat credit has been taken are removed after being used, the manufacturer shall pay the amount equal to Cenvat credit taken on the said capital goods reduced by 2.5% for each quarter of year or part thereof from the date of taking the Cenvat credit. The Board has also in the Circular dated 1-7-2002 clarified that in the case of clearance of goods after being put into use, the value shall be determined after allowing the benefit to depreciation as per rates fixed in Boards letter dated 26-5-1993. The Respondent has utilized the machinery for nine years and paid duty on transaction value. The machin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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