TMI Blog2015 (10) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... y in accordance with Rule 3(5) when it removed the used capital goods and consigned them to M/s. Harsh International (Khaini) Pvt. Ltd. - there is no question of paying any penalty under Section 11AC of the Act or any interest on the duty. Thus the appellant is not liable to the payment of duty, interest or penalty. - requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal - Stay granted. - E/20418/2014-SM - MISC ORDER No.22676 / 2014 - Dated:- 8-10-2014 - SHRI B.S.V.MURTHY, TECHNICAL MEMBER For the Appellant : Shri M.S. NAGARAJA, ADV For the Respondent : Shri S. Teli, Deputy Commissioner(AR) ORDER Per : B.S.V.MURTHY This is second round of litigation. The facts i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mehta Co. [2011(264) ELT 481 (SC)] and submits that only when the appellants reply to the letter written by the Range Superintendent on 25/01/2008, the Department came to know that appellants had cleared the machine as such without payment of duty. He also submits that in the invoice for clearance of the machine, appellants had quoted the Notification No.8/2003-CE dt. 01/03/2003 providing for exemption to SSI units. He submits that but for the verification of Sales Tax returns and ER1 returns and difference between the two by the Department, the omission could have been noticed and therefore extended period has been rightly invoked. 3. I have considered the submissions by both the sides. In this case the original adjudicating authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the original adjudicating authority is not very detailed. Instead Commissioner has relied upon earlier order which was set aside and makes an observation that cases relied upon and their application to the present case were discussed in detail in the earlier order and on that basis does not discuss any of the case law. He seems to have forgotten the fact that that order was challenged and set aside by the Tribunal. However, he also makes an observation that the original adjudicating authority was wrong in dropping the demand on the ground that there was no sufficient evidence to show about suppression or misdeclaration or misstatement. I also find that the observations of the Commissioner that the original adjudicating authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CENVAT Credit, namely :- (a) for computers and computer peripherals : for each quarter in the first year @ 10% for each quarter in the second year @ 8% for each quarter in the third year @ 5% for each quarter in the fourth and fifth year @ 1% (b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter. (underlining ours) 13. M/s. Harsh International Pvt. Ltd. admittedly sold the capital goods in June and July, 2007 to M/s. Harsh International (Khaini) Pvt. Ltd. The dates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Cenvat Credit on capital goods is to avoid the cascading effect of duty. If even after use for a couple of years, the Cenvat Credit is required to be reversed then it would certainly defeat the object of the scheme. To avoid misuse of the scheme in the Rules, it has been provided that if the machines are cleared as such the Assessee shall be liable to pay duty equal to amount of Cenvat Credit availed. The machines which are cleared after utilization cannot be treated as machines cleard as such. 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the view that used capital goods cannot be said to be capital goods removed as such for the purposes of Rule 3(5), is in consonance with the law . This judgment of the Bombay High Court has been noticed by the Punjab Haryana High Court in the above decision. 15. In the present case the appellant purchased the capital goods in the period between 2003 and 2005 and used them in its factory till they were sold to M/s. Harsh International (Khaini) Pvt. Ltd. in June and July, 2007. Thus the capital goods were used for a period of 2 to 4 years. They cannot therefore be stated to be sold as such capital goods. They were sold as used capital goods. We agree with the Bombay and Punjab Haryana High Courts and hold that the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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