TMI Blog2016 (6) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... able goods is liable to be paid upon clearance and in this case, there is no physical clearance of excisable goods by the appellant. On creation of new joint venture company, the duty liability on clearance of these goods has admittedly been discharged by that company. Hence, we find the demand on appellant amounting to ₹ 1,33,25,607/- cannot be sustained. Reversal of cenvat credit - The Hon’ble Supreme Court in the case of J.K. Spinning and Weaving Mills Ltd., & Anr.[1987 (10) TMI 51 - SUPREME COURT OF INDIA] examined the scope of term removal. It was held that there can be no doubt that the word removal contemplates shifting of a thing from one place to another. In other words, it contemplates physical movement of goods from one place to another. The Tribunal in Dalmia Cements (Bharat) Ltd. Vs Commissioner of Central Excise, Tiruchirapalli reported in [2007 (11) TMI 211 - CESTAT, CHENNAI] following the ratio of the Hon’ble Supreme Court in the above decision examined the scope of application of Rule 3 (5) of Cenvat Credit Rules, 2004 - when there is no removal of goods under cover of invoice, as provided under rule 9, there is nothing in Rule 3 (5) to invoke the deeming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds:- (a) As far as manufactured final products, he submits that an amount of ₹ 1,33,25,607/- has been discharged by the new legal entity, namely, M/s. Renold Chain India Pvt. Ltd. (RCIPL). He states that though the excise duty liability on the final products emerges immediately after manufacture there was no clearance by the appellant as the goods were part and parcel of slump sale to M/s. RCIPL, who later discharged duty liability as and when these goods were cleared out of the factory. Since there is no physical clearance of manufactured items by the appellant, there can be no duty liability fastened on them. (b) Regarding Cenvat credit availed on input, goods-in-process and capital goods, he submitted that the provisions of Rule 3 (5) of Cenvat Credit Rules, 2004 has no application as there is no physical clearance of any of these items. At the time of availing credit on inputs/capital goods, these credits were legally taken and there has been no dispute regarding their eligibility. The short point is only about the further disposal of capital goods and inputs on transfer of these goods to a new legal entity. The learned counsel relies on the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, physical removal should be presumed as Chain Division is effectively handed over to another company and there is no requirement for physically removing the items. It is his submission that Rule 3 (5) has been correctly implemented by the original authority. Regarding penal provisions, the learned Authorised Representative submitted that the details of goods transferred were not intimated to the department, though regarding transfer of Chain Division intimation was given and the change of licensing with a new demarcation of premises for factory was done with the approval of jurisdictional officer. 5. Heard both sides and examined the appeal records in detail. 6. The main point for decision in this appeal is the liability of the appellant to pay an amount equal to credit availed on inputs, work-in-progress and capital goods consequent on sale/transfer of Chain Division, available at the time of transfer of the said division to M/s. RCIPL. The appellants liability for penalty under section 11AC is also a matter to be resolved. 7. The admitted facts of the case are that the appellant had two divisions in which the excisable goods are manufactured. The Chain Divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 2004 consequent upon the sale and transfer of Chain Division to a new Joint venture company. An amount of ₹ 1,17,33,687/- has been confirmed for recovery from the appellant in terms of Rule 3(5) of Cenvat Credit Rules, 2004. The original authority held that the appellant deemed to have removed said capital goods from their premises to a new and separate factory premises of M/s. RCIPL consequent upon the sale and transfer of Chain Division. The relevant provision of Rule 3 (5) of Cenvat Credit Rules, 2004 relied upon by the original authority is reproduced as below:- (5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, 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 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: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act. After noting that the term removal had not been defined anywhere in the statute, the Apex Court observed as under :- There can be no doubt that the word removal contemplates shifting of a thing from one place to another. In other words, it contemplates physical movement of goods from one place to another. The word removal has not been defined under CCR, 2004 either. In the circumstances, the above observation of the Apex Court assumes significance and has to be followed as binding ruling. Accordingly, we are of the view that all the decisions cited by ld. Counsel in support of the assessee s contention that Rule 3(5) of the CCR, 2004 would not be invocable unless there was physical removal of capital goods/inputs are in accordance with the ruling of the Apex Court. . .. .. .. 11. We are also in agreement with ld. Counsel s proposition that a deeming provision should be express. Any quasi-judicial authority, however learned, cannot deem the existence of a deeming provision where there is none in the text of the relevant statute. The Hon ble Supreme Court s judgment rendered in Shyam Oil Cake Ltd. (supra) seems to support the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f business transaction and not for sale transaction in terms of Sales Tax or Central Excise provision. We note that the invoices issued did not contain the details of any removal, mode of transport, rate of duty, duty payable thereon etc., as per the requirement of Rule 11 (2) of Central Excise Rules, 2002. We also note that based on these invoices no credit can be availed by any buyer as these are not in terms of Rule 9 of Cenvat Credit Rules, 2004. In view of settled legal position regarding need for physical removal of capital goods or inputs, in order to attract the provisions of Rule 3 (5) of Cenvat Credit Rules, 2004, we find that there is no justification to invoke such provision to demand and recover any amount from the appellant in this case. As such, we find no justification for the confirmation of demand towards capital goods. The same reasoning is applicable to the recovery of amount for the inputs amounting to ₹ 91,76,449/-. The demand towards such recovery is also not sustainable. There is no allegation or finding regarding any irregular credit availed on inputs or capital goods or usage of these goods for other than approved purposes. 11. Regarding demand of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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