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2016 (7) TMI 986 - CESTAT CHENNAI

2016 (7) TMI 986 - CESTAT CHENNAI - TMI - Reversal of cenvat credit on capital goods - loss of capital goods in the fire - Appellant claimed compensation from M/s.Oriental Insurance Co.Ltd. Chennai on which duty element involved on lost capital goods - Held that:- the credit was disallowed only on the premise that the original equipment was purchased in 1991 when no credit scheme was in force. It is an undisputed fact that there was no such provision in Cenvat rules for denial of capital goods c .....

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oods purchased in 2006. The fact that the appellant claimed insurance, which is inclusive of Excise Duty, is not at all relevant. - Demand set aside - Decided in favor of assessee. - Appeal No. E/41370/2014 - Final Order No. 41061/2016 - Dated:- 4-7-2016 - Shri P. K. Choudhary, Judicial Member For the Appellant : Shri M. Kannan, Advocate For the Respondent : Shri K. Veerabhadra Reddy, JC (AR) ORDER This appeal has been directed against Order-in-Appeal No. 44/2014 (M-I) dated 08.04.2014 passe .....

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uring of motor vehicle parts. They availed credit for excise duty paid on inputs and capital goods. On 06.01.2006, a fire accident occurred in the appellant's Shoot Squeeze Auto Moulding Plant, which was imported by the unit from Frix Hansburg, Italy in 1991. Appellant claimed compensation from M/s.Oriental Insurance Co.Ltd. Chennai on which duty element involved on lost capital goods was worked out to ₹ 2,97,536/-. The appellant was issued a SCN dt. 7.2.2011 proposing to demand the cr .....

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. 3. Shri M. Kannan, Ld. Advocate submits that the original capital goods were purchased in the year 1991 and no modvat credit scheme was available at that time. He submits that there was no irregular availment of credit inasmuch as the impugned machineries were installed in 1991 when there was no modvat scheme available. Since the goods purchased in 1991 were lost in fire accident in 2006, the question of availing irregular credit or removal of capital goods outside the factory does not arise. .....

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d not avail credit on the original equipment as no credit scheme was in force. He relies on the case law in CCE Bangalore Vs Tata Advanced Materials Ltd. 2011 (271) ELT 62 (Kar.) which upheld the Tribunal's order in Tata Advance Materials Vs CCE Bangalore 2009 (241) ELT 92 (Tri.-Bang.) holding that the assessee is not liable to reverse the cenvat credit for the goods destroyed. 3. Ld. AR reiterated the findings of the adjudication order. He submits that parts were imported to repair the old .....

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s that the appeal may be allowed on merits. 5. Heard both sides and examined the records. 6. On perusal of the OIA, at para-9 of the OIA, I find that the credit was disallowed only on the premise that the original equipment was purchased in 1991 when no credit scheme was in force. It is an undisputed fact that there was no such provision in Cenvat rules for denial of capital goods credit on the parts imported for replacement, particularly during that period original equipments were not covered u .....

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all relevant. I find from the decision relied upon by learned counsel in the case of CCE Bangalore Vs Tata Advanced Materials Ltd. (supra), the Hon'ble Karnataka High Court has dealt a similar issue on hand, in detail, and by following the Hon'ble Supreme Court's judgement in Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd. reported in 1999 (112) E.L.T. 353 (S.C.), allowed the appeal of the assessee. The relevant paragraphs 5 & 6 of the Hon'ble Karnataka High Cour .....

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It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken. in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time .....

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y that it becomes available. 6. Therefore, it is clear that there is no provision in the rules which provides for a reversal of the credit by the Excise Authorities except where it has been irregularly taken in which event it stands cancelled or if utilised has to be paid for. This is not the case of the revenue. In the instant case, when the assessee purchased the capital goods and when he has paid the excise duty on them, in law, he is entitled to get the credit on the duty paid while clearing .....

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