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M/s. Harita Seating Systems Ltd Versus Commissioner of Central Excise, Pune

2017 (12) TMI 316 - CESTAT MUMBAI

CENVAT credit - capital goods installed in the factory - formation of joint venture by the appellant with 51% share - case of the department is that new joint venture was created and foam division was transferred to such joint venture, it is removal of capital goods from the appellant to joint venture. Therefore such capital goods and input lying in the joint venture premises is liable for payment of duty in accordance with Rule 3(5) CCR, 2004 - Held that: - there is no dispute that the capital .....

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M/s. L.G. BALAKRISHNAN AND BROS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, TRICHY [2016 (6) TMI 829 - CESTAT CHENNAI], where it was held that when there is no removal of goods under cover of invoice, as provided under rule 9, there is nothing in Rule 3 (5) to invoke the deeming fiction as insisted by the department. - Appeal allowed - decided in favor of appellant. - Appeal No. E/85475/16 - Dated:- 6-10-2017 - Mr Ramesh Nair, Member ( Judicial ) Shri. Rajesh Ostwal, Advocate for the Appell .....

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ufacture foam. Before creating joint venture the appellant had availed Cenvat credit in respect of certain capital goods which were installed in their factory and used for manufacturing foam. The case of the department is that new joint venture was created and foam division was transferred to such joint venture, it is removal of capital goods from the appellant to joint venture. Therefore such capital goods and input lying in the joint venture premises is liable for payment of duty in accordance .....

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unsel for the appellant submits that capital goods and input on which credit was availed were very much available in the same premises and used in the manufacture of dutiable goods. The provision of Rule 3(5) is applicable only when the goods is removed from the factory. In the present case admittedly goods were lying in the factory premises, therefore even if there is creation of new joint venture but there is no removal of goods. He placed reliance on the following judgments: (a) CCE Vs. M/s. .....

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nt venture company consequently provision of Rule 3(5) is applicable. 4. I have carefully considered the submissions made by both sides and perused the record. 5. I find that there is no dispute that the capital goods and input on which credit was availed by the appellant and subsequently the creation of joint venture it was used by the joint venture but such goods were not removed from existing premises. The payment of duty is required to be made under Rule 3(5) only in such case whether the go .....

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ess and capital goods consequent on sale/transfer of Chain Division, available at the time of transfer of the said division to M/s. RCIPL. The appellant s liability for penalty under Section 11AC is also a matter to be resolved. 7. The admitted facts of the case are that the appellant had two divisions in which the excisable goods 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. .....

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entity. The dispute is on the Cenvat credit reversal of inputs/capital goods as well as excise duty payment on the finished product. 8. The excise duty liable to the appellant on the finished goods and work-in-progress is considered first. It is the case of the appellant that there is no physical removal of these goods. On transfer of Chain Division, M/s. RCIPL, came in custody and ownership of these goods and have duly discharged appropriate duty on these items. The assertion of the appellant h .....

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excise duty. We notice that this factual position as asserted by the appellant have not been rebutted by the original authority in any finding. Though, excise liability arises immediately on manufacture it is only on removal of goods the duty is to be discharged. We find that the duty on finished excisable goods is liable to be paid upon clearance and in this case, there is no physical clearance of excisable goods by the appellant. On creation of new joint venture company, the duty liability on .....

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l authority held that the appellant deemed to have removed said capital goods from their premises to a new and separate factory premises of M/s. RCIPL consequent upon the sale and transfer of Chain Division. The relevant provision of Rule 3(5) of Cenvat Credit Rules, 2004 relied upon by the original authority is reproduced as below :- (5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the m .....

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be made when any capital goods are removed outside the premises of the provider of output service for providing the output service and the capital goods are brought back to the premises within 180 days, or such extended period not exceeding 180 days as may be permitted by the jurisdictional Deputy Commissioner of Central Excise, or Assistant Commissioner of Central Excise, as the case may be, of their removal. The admitted fact of the case is that, there is no physical removal of either capital .....

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removal of either capital goods or raw materials at the time of sale and transfer of Chain Division. We find the central point to be considered for application of the abovementioned rule is whether or not the inputs or capital goods on which Cenvat credit has been taken are removed as such from the factory of the appellant. The Hon ble Supreme Court in the case of J.K. Spinning and Weaving Mills Ltd. & Anr. (supra) examined the scope of term removal . It was held that there can be no doubt .....

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e also find that one of the decisions cited by ld. Consultant for the Revenue, indeed, supports the assessee s case and the same is the Apex Court s decision in J.K Spinning and Weaving Mills case (supra). In that case, their lordships had examined, inter alia, the meaning of place of removal defined under Section 4(4)(b) of the Central Excise Act. After noting that the term removal had not been defined anywhere in the statute, the Apex Court observed as under :- There can be no doubt that the w .....

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ot be invocable unless there was physical removal of capital goods/inputs are in accordance with the ruling of the Apex Court. 11. We are also in agreement with ld. Counsel s proposition that a deeming provision should be express. Any quasi-judicial authority, however learned, cannot deem the existence of a deeming provision where there is none in the text of the relevant statute. The Hon ble Supreme Court s judgment rendered in Shyam Oil Cake Ltd. (supra) seems to support the assessee s case on .....

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envat Credit Rules, 2004 and there is nothing in Rule 3(5) of the Cenvat Credit Rules, 2004 to invoke the deeming fiction as insisted by the adjudicating authority. The language of Rule 3(5) is plain and simple. When the inputs or capital goods on which cenvat credit has been taken are removed as such from the factory, then subject to compliance of other requirements, the credit availed in respect of inputs on capital goods shall be paid. This situation has not arisen in the present case, as no .....

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ule 3(5) of CCR, 2004, as made by the Tribunal in the present case is fully justified and it calls for no interference at the hands of this Court. 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 fin .....

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ued 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 the provisions of Rule 3(5) of Cenvat Credit Rules, 2004, w .....

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