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M/s Stovec Industries Ltd. Versus Commissioner (Appeals) , Central Excise-Ahmedabad

Reversal of Cenvat Credit - sale of plant and machinery (capital goods) - contravention of the Rule 3(5) of Cenvat Credit Rule 2004 - Held that:- the impugned order is set aside and the matter is remanded to the Adjudicating Authority to re-determine quantum of Cenvat Credit by taking into consideration the depreciation allowed under the relevant rules as laid down in Navodhaya Plastic Industries Ltd.'s case (2013 (12) TMI 82 - CESTAT CHENNAI). - Decided partly in favor of assessee. - Appeal No. .....

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of falling under CH 84 & 87 of CETA, 1985. On the basis audit observation, Show Cause/Demand Notice was issued to the appellant on 22.6.2007 alleging that even though the appellant has sold their plant and machinery to M/s Technova Imaging Systems (P) Ltd against commercial Invoice dt 30.6.2006 for ₹ 7,85,00,000/- and possession thereof was handed-over to the purchaser, but the Cenvat Credit of ₹ 18,03,635/- involved on the said capital goods were not reversed in contravention of .....

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lled in their graphic division was sold, but since the said plant and machinery had not been removed from the premises, therefore, the Cenvat Credit availed on those capital goods, was not required to be reversed. He further submits that the capital goods had been put to use and not cleared as such , therefore, no Cenvat Credit is required to be reversed on the sale of used/installed capital goods. In support, he referred to the decision of Hon ble Karnataka High Court in the case of CCE Vs Sole .....

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s Associated Cements Co Vs CCE - 2015(322) ELT. A175(SC). He has further submitted that the said decision has been followed by the Tribunal in the case of in the case of J K Paper Mills Vs. CCE,C&ST, Bhuveneshwar reported in 2014(309)ELT.359 (Tri. Kol). Further, responding to the issue that since the goods are sold after its use in the factory, the Ld AR submitted that the depreciated value of the plant and machinery should be considered for reversal of the Cenvat Credit and not the value at .....

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Ltd. The invoice contains the details of the plant and machinery and parts thereof. Also, it is not disputed that the possession of the said plant and machinery was handed over to M/s Technova Imaging Systems (P) Ltd pursuant to the said sale. In my view, the issue is no more res integra being settled by the Hon ble Karnataka High Court in the case of Associated Cement Company. Their Lordship observes as under : 6. Therefore, in our considered view though there had been no physical removal of po .....

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r unit was not physically removed from the premises of the assessee. Therefore, we are of the considered opinion that the Tribunal without application of mind and without proper appreciation of the said transactions in the light of the relevant provisions of the Central Excise Act and the Rules has allowed the appeal of the assessee-company and set aside the Order-in-Original passed by the Commissioner of Central Excise, Belgaum. In the circumstances, we answer the above question of law in the n .....

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decision of this Tribunal in the case of Navodhaya Plastic Industries Ltd (supra). In the said judgment it has been held that the depreciated value of the capital goods be considered in calculating amount of credit require to be reversed. It is observed as: 7. During 1-9-2004 to 13-11-2007 the provision in force read as under : With effect from 10-9-2004, when new Cenvat Credit Rules, 2004 were introduced, the relevant rule, i.e. Rule 3(5), read as below : When inputs or capital goods, on which .....

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1-7-2002 to the effect that credit amount to be reversed will be reduced by 2.5% per quarter of use of the machinery. 9. After 13-11-2007 the applicable provisions read as under : With effect from 13-11-2007, the following provision has been introduced in Rule 3(5) ibid. Provided also that if the capital goods on which Cenvat credit has been taken are removed after being used, the manufacturer or provider of output service shall pay an amount equal to the Cenvat credit taken on the said capital .....

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