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M/s Shree Krishna Petro Yarn Ltd., Shree Krishna Polyster Ltd., Pravin Kumar Tayal Versus C.C.E. & S.T. -Vapi

2017 (11) TMI 763 - CESTAT AHMEDABAD

Irregular availment of CENVAT credit - capital goods - whether Modvat Credit of ₹ 38,53,942/- on capital goods with interest and penalty is recoverable from the appellant M/s SKPYL and consequent confiscation of seized capital goods, plant and machineryas directed be confirmed and penalty on other appellants be upheld? - Held that: - Even though, in the subsequent statement of the Director Shri. Tayal, it has been stated that those capital goods were removed from the factory to be inst .....

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- the evidence brought on record revealed that the capital goods were installed in the premises of M/s SKPL through solid foundations. Accordingly, the demand with interest has been rightly issued and confirmed invoking larger period of limitation against M/s SKPYL. - Confiscation of capital goods, on which credit availed at M/s SKYPLbut found in the premises of M/s SKPL - Held that: - confiscation do not sustain as removal of the duty paid capital goods without intimation to the department .....

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ed:- 31-10-2017 - Dr. D. M. Misra, Member ( Judicial ) For the Appellant : Mr. Swapnendu Mishra ( Advocate ) For the Respondent : Mr. A. Mishra ( A. R. ) ORDER Per : Dr. D. M. Misra These three appeals are filed against order-in-appeal No. KRS/33-35/VAPI/2010 passed by the Commissioner (Appeals) Central Excise and Customs, Vapi. 2. Briefly stated facts of the case are that Show Cause Notice was issued to the appellant M/s Shri Krishna Petro yarn Ltd. (SKPYL) (now known as M/s Eskay Knit India Lt .....

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ge of the department. Alos, it was proposed for confiscation of the capital goods found in the premises of M/s SKPL, personal penalty on the Director and employee of M/s SKYPL. On adjudication the demand was confirmed with interest and equal amount of penalty on M/s SKYPL, goods were directed to be confiscated with an option to redeem the same on payment of fine of ₹ 5.00 Lakhs, penalty of ₹ 5.00 lakh imposed on M/s SKPYL under Rule 173Q of erstwhile Central Excise Rules, 1944, perso .....

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and after installation in their premises availed Modvat Credit on the same. He submits that these goods were later removed to their another unit M/s SKPL, belonging to the same group company, where no credit availed on such transferred goods. It is his contention that the capital goods in question since duly installed at the time of its receipt and used in the manufacture of finished goods for a period of three to four years, therefore, its removal to the premises of sister concern M/s SKPL can .....

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ion that confiscation of the capital goods on which duty has been duly discharged cannot be sustained; also confiscation of plant and machinery of the appellant M/s SKPL unsustainable in law. It is his contention that under a bonafide belief that transfer of capital goods from one unit to another unit belonging to the same group would not require any reversal of credit being a revenue neutral situation, therefore, demand as well as penalty on the appellants are unsustainable in law. 4. Ld. AR fo .....

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tal goods mentioned at Serial No. 35 to 37 of the Annexure C to the Show Cause Notice, no serious submission was advanced by the department disputing denial of credit and the remaining amount of ₹ 5,96,711/- relates to capital goods mentioned at Annexure E to the Show Cause Notice which were not used in the manufacture of dutiable finished goods, therefore, not eligible to credit. He submits that appellant had disputed the demand relating to removal of the capital goods amounting to ₹ .....

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Sh. Madan Lal Gupta in his statement dated 03.02.1999 and also during the course of panchnama. He has further submitted that even though in his statement, Sh. Pravin Tayal, Chairman of both the units claimed that the capital goods installed in SKPYL were removed in 1998-1999 to another unit i.e. M/s SKPL, for repairing, however could not produce any evidence of its removal and the details of repairing undertaken at M/s SKPL. On the contrary it was noticed during the course of panchanma that thes .....

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been correctly confirmed in the impugned order, since the appellant could not so sufficient evidences to establish that the capital goods on which credit had been availed in the premises of M/s SKYPL, had been duly installed and used in the manufacture of finished goods in that factory, when the said capital goods were found in the premises of M/s SKPL, then another registered unit. 5. Heard both the sides and perused the records. 6. I find that the short issues involved in the present case for .....

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e premises of the appellant M/s SKPYL on the date of visit of the officers. Explaining the reason for its non-availability, General Manager Excise, Sh. Gupta has admittedly informed the visiting officers that the same were removed from the factory and installed in the premises of M/s SKPL, without any intimation to the department. Even though, in the subsequent statement of the Director Shri. Tayal, it has been stated that those capital goods were removed from the factory to be installed for rep .....

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eals) analyzing the evidences in detail recorded his findings as follows: 6 I have gone though the case records, submissions made by the appellants in their appeal memorandum and afterwards and various case laws relied upon by them. I find that the demand of ₹ 38,52,942/- constitutes three parts. First part constitutes of ₹ 27,50,691/- and which pertains to Sr. No. 1-34 of the Annexure attached to SCN, Second part constitutes of ₹ 5,05,540/- and which pertains to Sr. No. 35-37 .....

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e capital goods which were not installed in the factory premises but were installed in the premises of M/s SKPL. In this respect I find that there is no dispute about the non availability of the capital goods in question in the appellants premises and that the appellant had taken modvat credit on the same. I further find that the appellants have submitted no evidence in support of their argument that the capital goods were removed from their unit after use for 3-4 years. Had the said capital goo .....

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submitted by the appellants and accordingly above submissions are rejected. The appellants have also argued on limitation. In this respect also the appellants have provided no evidence to show that the receipt of the said goods was known to the department and they had also verified the same. Even if it was so it cannot be said that its removal, with or without use, was also known to the department. The appellants themselves are stating that the same were cleared in 1997-1998, for which they hav .....

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and are subject to different taxes separately and therefore such argument has no legal force. Further if such argument is accepted there will not be any need to pay any duty as credit of the same will always be available to the recipient unit. There will be no evasion also. The Act or the Rules also do not support any such argument. There is also no evidence to show that duty if pad by the appellant would have been paid from Cenvat account and not from PLA/cash account. On the other hand I have .....

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the capital goods in question. No contrary evidence has been placed by the appellant to rebut the said finding in their present Appeals before this forum. 8. The appellant had claimed that the demand is barred by limitation in as much as as the credit had been correctly availed by them on capital goods after its receipt, and installation of the same in their factory premises; that they have been filing returns from time to time with the department. I find that the Chief General Manager Shri Mada .....

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