TMI Blog2017 (9) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... , AC (AR) for the Respondent ORDER Per Bench Brief facts are that the appellants are engaged in the manufacture of sugar and molasses and are registered with the Central Excise Department. On specific intelligence that some capital goods on which appellants had availed MODVAT credit and which were used for generating power was transferred by them during 2001 to their sister concern namely M/s. AURO Energy Ltd. (herein after referred to as AURO) without payment of duty, investigation was conducted. On scrutiny of records as well as statements recorded by the department it appeared that the appellants have contravened the provisions of the erstwhile Rule 57AB of Central Excise Rules, 1944. A show cause notice was issued alleging that appellants had sold capital goods on which MODVAT credit had been taken to AURO without payment of duty and contravening the provisions of Rule57AB of Central Excise Rules, 1944 and proposing to demand duty to the tune of ₹ 73,26,529/- along with interest and also for imposing penalties. After adjudication, the original authority confirmed the duty amount of ₹ 65,37,354/- along with interest and imposed equal penalty under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al movement of goods from one place to another. That there was no removal of capital goods and therefore the allegation that appellant contravened the provisions of law is not correct. It is also argued by the counsel that the very same issue came for consideration before the Hon ble High Court of Madras in the case of Commissioner of Central Excise Vs. CESTAT 2015 (323) ELT 290 (Mad.) wherein on similar set of facts when the capital goods were leased out, the Hon ble High Court held that there was no removal of goods as contemplated under CENVAT Credit Rules. Further, in the case of L.G. Balakrishnan Bros. Ltd. Vs. Commissioner of Central Excise, Trichy 2016 (340) ELT 708, the Tribunal had occasion to consider the demand of duty on the allegation that capital goods were sold to the new entity formed by the appellant. The Tribunal in the said case held that when capital goods were transferred by sale there was no removal as contemplated in CENVAT Credit Rules. He therefore submitted that the duty demand is unsustainable. 3. Against this, ld. AR Shri R. Subramaniyam reiterated the findings in the impugned order. He submitted that the appellants have sold the capital goods / pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said power plant along with the land, building, plant and machinery were leased by the assessee for consideration to another company 2. Whether on such lease the assessee shall have to pay an amount equal to the credit availed in respect of such inputs or capital goods in terms of Rule 3(5) of the Cenvat Credit Rules, 2004, deeming the transfer of the right to use the said power plant comprising the land, building, plant and machinery to another company as removal as such. C.M.A. No. 3421/2008 xxxx xxxxx xxxxxx 3. Whether the power plant and the inputs, capital goods and input services used in the said power plant could be said to be an integral part of the factory of the assessee to be eligible inputs, capital goods and input services as defined in Rule 2(a), Rule 2(k) and 2(l) of the Cenvat Credit Rules, 2004, even after the lease resulting in transfer of the power plant from the possession and use of the assessee to another company 7. The Hon ble High Court referred to J.K. Spinning and Weaving Mills Ltd. (supra) and held that when the capital goods are transferred by lease, there was no removal of goods as contemplated under Rule 3(5) of CENVAT Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods are manufactured. The Chain Division has been transferred to a new joint venture company, which is created by the appellant with M/s. Renold International Holding Ltd., (RIHL). The new legal entity RCIPL has acquired/taken-over the Chain Division of the appellant. Consequent on such new arrangement, the appellant got their Central Excise registration suitably amended along with new area demarcation. The new entity also got Central Excise registration approved. At the time of such creation of new joint venture company, the capital goods, inputs and goods-in-process along with finished goods lying in the said Chain Division were also transferred to a new legal entity. The dispute is on the Cenvat credit reversal of inputs/capital goods as well as excise duty payment on the finished product. xxx xxxx xxxxx xxxxx 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 whereas here only a part of the factory is transferred. We find such find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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