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2015 (10) TMI 569 - CESTAT CHENNAI

2015 (10) TMI 569 - CESTAT CHENNAI - TMI - CENVAT Credit - removal of capital goods after use - removal of cylinders/rollers which are used in printing of packaging materials - Held that:- The Rule 3(4) of CCR 2002 has been amended by notification No.13/03-CE (NT) dt.1.3.2003 where the provisions were inserted for removal of inputs and capital goods removed as such and stipulates where the amount equal to the credit availed on such inputs or capital goods is to be paid by the manufacturer. Rule .....

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the engravings are redone which involves detailed processing of enameling, melting etc. which amounts to manufacture. The appellants have also cleared the goods in equal proportion to dealers also. - In the present case demand of reversal of entire credit on used and worn out capital goods cleared is not sustainable as these goods are cleared as such but used and worn out Rollers. Accordingly the demand is restricted to the extent on the value arrived after allowing depreciation. The ld. Advoca .....

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y paid excise duty as per the transaction value and if the depreciation value is taken into account and if it results in excess payment, no amount is payable by appellant and the appellants are not entitled for any refund. Adjudicating authority is directed to re-quantify the amount after allowing depreciation value only to this extent Appellants shall produce all the relevant details before the original authority - Decided in favour of assessee. - Appeal Nos. E/808/2007, E/12/2008 & E/155/2008 .....

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priate excise duty as per the transaction value. Revenue took a view that the goods in dispute are capital goods removed as such by the appellants. Therefore, entire credit availed on the rollers was demanded. In Appeal No. E/12/2008, appellants have removed Slitting Machine, Blown film plant, 3 Layer Blown Film Machine, Expert Lamination machine, Forklift truck which are old and used machineries on payment of duty on transaction value whereas the department demanded full reversal of credit as t .....

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appeal (E/808/07), the period pertains to April 2001 August 2005 where there was no provision to demand duty on removal of capital goods. Further, he submits that these goods were used as scrap. In appeal No. E/808/07, he submits that demand is hit by limitation as they have clearly mentioned in their invoice as to used rollers and paid appropriate of duty and included in monthly ER-I returns. He submits that they have clearly mentioned the description of the goods as scrap of steel rollers and .....

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ere if the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on the transaction value. He also submits that if the depreciation is allowed on the used goods, they have already paid excess duty as per transaction value. He submitted a work sheet. There was ambiguity on the removal of capital goods as such and it involves question of interpretation of rules and various High Court and Tribunal rulings held on this issue that no penalty is .....

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manded reversal of equivalent credit availed on the capital goods. He further submits that they have suppressed the facts and declared it as 'scrap' instead of used capital goods and also submits that machineries which were cleared are not scrap and not for melting. He further submits that rollers cleared to their own Unit II for re-engraving were returned back to appellant. Therefore, it cannot be called as scrap. The classification claimed by the appellant under heading 7204 should be .....

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t the capital goods are cleared as such and demanded reversal of entire credit. 6. I find that the period involved in respect of first appeal relates to April 2001 to August 2005 and the period in respect of second appeal relates to September 2005 to February 2007 and third is August 2005 to February 2006. The Rule 3(4) of CCR 2002 has been amended by notification No.13/03-CE (NT) dt.1.3.2003 where the provisions were inserted for removal of inputs and capital goods removed as such and stipulate .....

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ent but these are used and worn out. Once the engravings are worn out, it cannot be used in printing of material unless the engravings are redone which involves detailed processing of enameling, melting etc. which amounts to manufacture. The appellants have also cleared the goods in equal proportion to dealers also. 7. I find that on an identical issue, this Tribunal held that in respect of removal of old and used goods, duty is payable after allowing depreciation on the value by relying on Hon .....

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s. Raghav Alloys Ltd. (supra), which was upheld by the Honble High Court of Punjab & Haryana. Further, the Honble High Court of Madras in the case of CCE Vs. Rogini Mills Ltd. (supra), considered the above Tribunals decision (supra) and discussed on two main issues as under:- "1. Whether the expression "as such" appearing in Rule 3(4)(C) of the Cenvat Credit Rules, 2002 would cover used as well as unused capital goods or not? 2. Whether the assessee is required to reverse cred .....

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l products, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule 7.1." 6. In the first place, the provision for reversal of the Cenvat credit availed has been provided for under Rule 3(4)(C) of the 2004 Rules. When we peruse the order of the Principal Bench, New Delhi in its order reported in 2009 (242) ELT 124, we find a reference to the Boards Circular No. 643/34/2002-CX .....

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aking the Cenvat credit. The Boards Circular dated 01.07.02 stated that the capital goods on which Cenvat credit had been taken or cleared under Rule 3(4), the manufacturer would be required to pay an amount equal to the duty at the rate prevailing on the date of clearance and on the value determined under the provisions of Section 4 of the Central Excise Act and the depreciation as per the rates fixed in the Boards letter dated 26.05.93 should be allowed. 7. On a conjoint reading of Rule 3(4) w .....

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d the letter as well as the addition of proviso to Rule 3(5) with effect from 13.11.2007, is the manner in which the expression as suchused in Rule 3(4) can be interpreted. Consequently, the interpretation put in the order of the Principal Bench reported in 2009 (242) ELT 124 merits acceptance. The order of the Tribunal impugned in this appeal applying the said ratio of the Principal Bench is, therefore, perfectly justified." The Hon'ble Madras High Court upheld the Tribunals decision t .....

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