TMI Blog2017 (8) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 without payment of duty under the belief that there was no provision in the Cenvat Credit Rules 2004 to pay cenvat either in full or depreciated amount of cenvat during the relevant period. The Hon'ble High Court of Karnataka in the case of CCE, Bangalore - II Vs. Solectron Centum Electronics Ltd [2014 (10) TMI 596 - KARNATAKA HIGH COURT], after considering the provisions of cenvat credit before its amendment and after the amendment on 13.11.2007 has held that till the amendment of Rule 3(4) of Cenvat Credit Rules 2004 as on 13.11.2007, in respect of used capital goods, there was no liability to pay duty and it was only with the addition of the proviso thereto that the situation changed. Assessee not required to reverse CENVAT c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value. Hence the present appeal. 2. Heard both the parties and perused the records. 3. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed contrary to the statutory provisions as well as contrary to the binding judicial precedent on the same issue. She further submitted that show-cause notice invoked Rule 3(5) of the Cenvat Credit Rules for demanding cenvat on removal of used capital goods. She further submitted that Rule 3(5) of the Cenvat Credit Rules 2004 was amended by introducing a third proviso vide Notification No.39/2007-CE (NT) dated 13.11.2007 whereas in the present case, the appellant cleared the used capital goods under invoice 51 dated 10.05.2007 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods are removed after being used for about eight months. It is pertinent to note that till the law was amended as on 13.11.2007 in respect of used capital goods, there was no liability to pay duty. In fact this is evident from the fact that in the Cenvat Credit Rules 2004, the proviso was added making the position clear which was not clear in the earlier provision, The proviso reads thus: 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 goods reduced by 2.5 per cent for each quarter of a year or part thereof from the date of taking the cenvat credit. The above said provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 below would lead to absurd results if an assessee is required to reverse the credit originally availed by them at the time of receipt of the capital goods, when the said capital goods are subsequently removed as old, damaged and unserviceable capital goods. This would defeat the very purpose of grant of facility of Modvat credit in respect of capital goods and would not be in accordance with the legislative intent. 13. The Delhi High Court in the matter of Harsh International (Khaini) Pvt. Ltd. v. Commissioner of Central Excise reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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