2005 (11) TMI 406 - AT - Central Excise

Summary

Issues:
1. Duty payment on removal of capital goods under Cenvat Credit Rules.
2. Invocation of extended period for demanding duty.
3. Intent to evade payment of duty.
4. Application of relevant rules and circulars.
5. Waiver of pre-deposit and stay of recovery.

Analysis:

Issue 1: Duty payment on removal of capital goods under Cenvat Credit Rules
The case involved the removal of capital goods on two occasions from the factory, with duty paid on the depreciated value in the first instance and on the sale price in the second instance. The Department issued a show-cause notice for short-payment of duty and penalty. The Tribunal noted that the demand was for duty equal to the Cenvat Credit availed as per the amended rules. However, the first clearance of capital goods was not covered by the relevant issue framed by the Commissioner, and the amendment was not retrospective. The assessee was in an advantageous position due to a Tribunal order in a similar case, indicating no provision for demanding duty on Cenvated capital goods removed after use in production.

Issue 2: Invocation of extended period for demanding duty
The Department invoked the extended period for demanding duty, citing contravention of sub-rule 4 of Rule 3. However, the Tribunal found that the authority was not justified in invoking the extended period without evidence of intent to evade payment of duty. The assessee followed the rules diligently, indicating no intent to evade payment. The Tribunal held that the assessee had a strong case on the limitation issue.

Issue 3: Intent to evade payment of duty
The Tribunal found that the assessee did not exhibit any intent to evade payment of duty. The assessee followed the relevant provisions and circulars diligently, indicating a lack of fraudulent intent. The Tribunal noted that the assessee's actions were in compliance with the rules and circulars, and there was no evidence of deliberate evasion.

Issue 4: Application of relevant rules and circulars
The Tribunal emphasized the importance of applying the correct rules and circulars in determining duty payment obligations. It highlighted the significance of following the provisions diligently to avoid any misinterpretation or incorrect application. The Tribunal considered the assessee's adherence to the rules and circulars as a crucial factor in determining the case outcome.

Issue 5: Waiver of pre-deposit and stay of recovery
In the final decision, the Tribunal granted a waiver of pre-deposit and stay of recovery concerning the duty and penalty amounts. This decision was based on the Tribunal's assessment of the case, considering the issues of duty payment, intent, and compliance with rules and circulars.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal concerning duty payment, invocation of extended period, intent to evade payment, application of rules and circulars, and the final decision on waiver and stay of recovery.