TMI Blog2017 (5) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... on of liability of duty on capital goods after their use was considered by Hon’ble Karnataka High Court in the case of CCE vs. Solectron Centum Electronics Ltd. [2014 (10) TMI 596 - KARNATAKA HIGH COURT] where Hon’ble High Court has analysed the term “as such” in the context of Rule 3(4) of CCR, 2004 and concluded that The assessee having validly availed cenvat credit, same is required to be reversed only if goods were cleared in the same position without payment of excise duty. The goods were not cleared in the same position but after having been used and in such situation Rule 3(4) of the Rules will not apply - the period in the present case is before 13.11.2007 - there is no liability to pay duty on clearance of impugned capital goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital goods either under erstwhile Central Excise Rules, 1944 or Cenvat Credit Rules, 2001/2002. The said capital goods were initially procured by M/s Unique Alliance Industries (a partnership firm) in 1997 and credit of duty paid on the said capital goods was taken and utilized for payment of duty on their final products. Subsequently the Plant, Machinery along with said capital goods of which credit was taken were sold to M/s Kamko Food Products (a partnership firm) vide agreement for sale dated 16.11.2000 between the two partnership firms. Thus, the appellants became the owner of the said capital goods. The said capital goods were not manufactured by appellants, but procured by them were removed at nil rate of duty during October, 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries at the time of the sale of the capital goods. He referred to four invoices, Sr. No.27 to 30 and stated that no credit has been taken by M/s Unique Alliance Industries on items mentioned at Sr. No.1 2 and the cooling plants mentioned at page 78 of the paper book. He relied upon the judgment of this Tribunal in the case of Hindustan Coca-Cola Beverages Pvt Ltd vs. CCE, Thane-I - 2015 (328) E.L.T. 496 (Tri.-Mumbai). 5. Ld. A.R. for the Revenue submits that Cenvat Credit Rules do not distinguish between the purchaser and the owner of the factory. Hence, the appellants were liable to pay the demand in terms of Rule 3(4) of CCR, 2002. He also invited attention to the Notification 8/2002-CE dt. 01.03.2002 and contended that the Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Products, the ownership of these capital goods was transferred to the appellants. Records show that there was sale of capital goods by M/s Unique Alliance Industries and the appellants had not taken over the previous running unit with the responsibility of the liabilities. Para 5 of the Show Cause Notice mentions that the capital goods were actually used in the manufacture of appellant s final product viz. Orange Candy 400gms, Mix Candy 400gms, Orange Candy 1/2kg (Fiesta), Mixed Candy 1/2kg (Fiesta), I.Pcardamon I.P Milk Magik 1/2kg etc. 7.3 From the above factual matrix, it is evident that after procuring these capital goods, the appellants had used these goods for manufacture of their final product. Hence the applicability of Rule 3(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame position without payment of excise duty. In the present case, it has been held by the Tribunal that goods were not cleared in the same position but after having been used and in such situation Rule 3(5) of the Rules will not apply. 12 . Bombay High Court in the case of Cummins India Ltd. v. Commissioner of Central Excise, Pune-III reported in 2007 (219) E.L.T. 911 (Tri.-Mumbai) confirmed the order of the Appellate Tribunal which has held as under : The plain and simple meaning of 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by 2.5 per cent for each quarter of a year or part thereof from the date of taking the Cenvat Credit. Therefore, the provisions of Rule 3(4) of CCR, 2004 are not applicable in the facts of this case. 7.5 Admittedly, the period in the present case is before 13.11.2007. Following the above decision of Hon ble Karnataka High Court, there is no liability to pay duty on clearance of impugned capital goods. 7.6 We also note that the appellants had only purchased the capital goods and had not taken over the previous running unit with the responsibility of liabilities. The premise that transfer of ownership of these goods to M/s Kamko Food Products, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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