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C.C.E., Raipur Versus Bhilai Steel Plant

2017 (1) TMI 293 - CESTAT NEW DELHI

Cenvat Credit - Restructuring of business - transfer of ownership of their captive power plant, installed within the factory to M/s Bhilai Electric Supply Company Ltd. (BESCL) - transfer deemed as removal by Department - whether the amount is required to be paid under Rule 3(4) of the Cenvat Credit Rules is to be paid by taking such capital goods as removed from the factory? - Held that: - the Hon’ble Supreme Court in the case of J.K. Cotton Spinning and Weaving Mills Ltd. [1987 (10) TMI 51 - SU .....

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nd of central excise duty - appeal dismissed - decided against Revenue. - Central Excise Appeal No. 2421 of 2007 - A/55927/2016-EX[DB] - Dated:- 20-12-2016 - Dr. Satish Chandra, President And Mr. V. Padmanabhan, Technical Member Shri Amresh Jain, A.R. for the Appellant-Revenue Shri Amit Jain with Shri Vipul Agarwal, Advocates ORDER Per V. Padmanabhan The present appeal filed by Revenue is against the order dated 24.5.2007 in which the Commissioner dropped the demand of central excise duty of abo .....

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3. Under a comprehensive business restructuring plan, to focus on areas of core competence and to reorganize its activities and with a view to streamline the production/power generation related activities, the Respondent transferred the ownership of their captive power plant, installed within their factory to M/s Bhilai Electric Supply Company Ltd. (BESCL), on the terms and conditions specified in the agreement dated 19.3.2002. 4. In terms of the agreement dated 19.3.2002, respondent delivered a .....

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since the respondent and M/s BESCL are separate legal entities, the inputs and capital goods which were transferred by the respondent to M/s BESCL stood removed and that the respondent was required to pay an amount equal to the duty of excise which is leviable on such inputs and capital goods installed in the captive power plant on which cenvat /movat was taken, in terms of Rule 3(4) of the Cenvat Credit Rules, 2002.Department relied on registration of M/s BESCL as a separate factory with the Ch .....

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of the respondent as it had failed to inform the sale of the captive power plant to the Department as also details of capital goods and inputs removed to M/s BESCL. 7. Respondent filed a detailed reply to the show cause notice dated 27.7.2006 stating that there was no removal of the capital goods in the captive power plant from the physical location, but there was mere change in ownership by transfer to M/s BESCL.There was no dismantling or physical shifting to any other location involved. Furt .....

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ifting. Ld. Commissioner also relied upon the fact that the respondent did not submit any revised ground plan of the factory even after leasing out the captive power plant and the goods continued to remain within the approved factory premises of the respondent. Having decided the issue in favour of the respondent, on merits, ld. Commissioner did not decide the issue of limitation. 9. Against the above order passed by the ld. Commissioner, the present appeal has been filed by the Department, on t .....

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as done in respect of stores and spares transferred along with captive power plant. 9. With this background, we have heard Shri Amresh Jain, ld.A.R. for Revenue and Shri Amit Jain, ld. Advocate for the respondent. 10. Ld. A.R. submits that in terms of Rule 3(4) of the Cenvat Credit Rules, the payment of an amount equivalent to the credit availed on capital goods is required to be made inasmuch as the power plant stands sold to M/s BESCL even though there is no physical removal of goods even aft .....

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ent of an amount equal to the excise duty leviable on such goods which re removed as such from the factory. His submission is that in the present case since there is no physical removal of capital goods, the aforesaid Rule is not attracted as there is no deeming fiction under Central Excise law with respect of removal goods. He relied upon the following case laws: * Steel Authority India Ltd. vs C.C.E., Raipur 2016 (332) ELT 825 (Tri0 Delhi); * Steel Authority of India Ltd. vs. C.C.E.,Bhubawa 20 .....

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s removed from the factory. Revenue relied upon the decision of the Hon ble Karnataka High Court in which a view was taken, in the light of the erstwhile Rule 57Q of the Central Excise Rules, that such an amount would be payable even in the absence of any physical removal of capital goods. The Hon ble High Court held that the transaction of sale of the entire power plant to different entity is nothing short of physical removal. However, the respondent has relied upon several case laws in which c .....

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alakrishnan and Bros. Ltd. (supra), the Tribunal has examined a similar question as is before us and considered the meaning of the word removal as explained by the Hon ble Supreme Court and held as under: 10. In view of the above settled decision, we find that the provisions of Rule 3 (5) are not attracted in the present case. The original authority s attempt to distinguish the above findings is not appropriate. He found that these decisions are regarding change of ownership of whole factory whe .....

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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 .....

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