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HI-REL Components (I) Ltd. Versus Commissioner of Central Excise, Pune-III

Reversal of Cenvat Credit availed on the capital goods and removed subsequently after use - Cenvat Credit of the Central Excise duty paid on the capital goods and used the same in the factory premises - Held that:- Till the law was amended as on 13-11-2007 in respect of used capital goods, there was no liability to pay duty. In fact, this is evident from the fact that in Cenvat Credit Rules, 2004, the proviso was added making the position clear which was not there in the earlier orders. The prov .....

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tioner : Shri M.P.S. Joshi, Advocate For the Respondent : Shri S.V. Nair, A.C. (AR) ORDER PER : M.V. RAVINDRAN This appeal is directed against Order-in-Appeal No. PIII/RS/362/2011 dated 13/12/2011. 2. The issue in brief is that the appellant has availed the Cenvat Credit of the Central Excise duty paid on the capital goods and used the same in the factory premises. Subsequently in September 2007, cleared removed these capital goods from the factory without reversal of Cenvat Credit availed. A sh .....

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e the capital goods were removed as such. On an appeal filed before the first appellate authority, he also aggrieved with the findings of the adjudicating authority. 3. Ld. Counsel draws my attention to the provisions of Rule 3(5) of Cenvat Credit Rules, 2004, which is applicable in the case in hand. After reading the said Rules, he submits that need to reverse the Cenvat Credit on capital goods removed, is only when they are removed as such. He would submit that identical issue came up before H .....

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nused was in the statute right from the beginning. He would read the provision of Rule 57-S of Central Excise Rules, 1944. He would then draw my attention to the statement of respondents officers and submits that they had agreed to discharge the duty liability accepting that they had cleared the capital goods without reversing the Cenvat Credit availed. He would submit that the Larger Bench decision on the Tribunal in the case of Modernova Plastyles Pvt. Ltd. 2008 (232) E.L.T. 29, has interpret .....

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as also include the used as well as unused capital goods. 5. I have considered the submissions made by both sides and perused the records. 6. On perusal of records, I find that the issue is insmall and narrow compose in as much whether the appellant is required to the reverse Cenvat Credit availed on the capital goods and removed subsequently after use. The show cause notice to the appellant invokes the provisions of Rule 3(5) of CCR, 2004 as it was during the relevant period. It is to be noted .....

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ount 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 9 : Provided that such payment shall not be required to be made where any inputs are removed outside the premises of the provider of output service for providing the output service: Provided further that such payment shall not be required to be made when any capital goods are removed outside the premises of the provider of output service for .....

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ce in the contention raised by the Ld. Counsel for the appellant that the issue is covered by the decision of Hon ble Karnataka High Court in the case of Solectron Centum Electronics (supra). The Hon ble High Court in the said judgment at Para No. 5, framed the second question of law that arose for their consideration as under: Whether the Hon ble Tribunal is correct in holding that the terms Capital goods as such occurring in Rule 3(4) of Cenvat Credit Rules, 2002 refers to only Unused cenvated .....

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made under the cover of an invoice referred to in rule 7. 11. The liability to pay duty on capital goods arises after the capital goods have been removed as such. The word as such is being the subject matter of interpretation by the various Courts. Punjab & Haryana High Court in the case of Commr of Cen. Ex., Ludhiana Vs. Khalsa Cotspin (P) Ltd., reported in 2011 (270) E.L.T. 349 (P & H) has held as under: The assessee having validity availed cenvat credit, same is required to be revers .....

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eaning of the expression as such would be that capital goods are removed without putting them to use. Admittedly, in the present case capital goods have been used for a period of more than 7 to 8 years. As such, interpretation given by the authorities below would lead to absurd results if an assessee is required to reverse the credit originally availed by them at the time of receipt of the capital goods, when the said capital goods are subsequently removed as old, damaged and unserviceable cap .....

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y till they 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. 14. Therefore, it is clear, till the law was amended as on 13-11-2007 in respect of used capital goods, there was no liability to pay duty. In fact, this is evident from the fact that in Cenvat Credit Rules, 2004, the proviso was added making .....

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