2007 (2) TMI 365 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57S(I)(ii) regarding payment of duty on capital goods.
2. Reversal of duty on transfer of capital goods.
3. Application of case laws in determining duty payment.
4. Consideration of duty reversal rate at the time of receipt vs. removal of goods.

Analysis:
1. The case involved a dispute regarding the payment of duty on capital goods cleared under Rule 57S(I)(ii). The respondents had paid duty after deducting 2.5% of credit taken for each quarter of a year of use, resulting in a lower duty amount. The Department issued a Show-Cause-Notice, confirmed by the Joint Commissioner, and imposed a penalty. The Commissioner (A) set aside the original order in favor of the assessee, leading to the revenue's appeal.

2. The Commissioner relied on the case law of CCE, Vadodara v. Asia Brown Boveri Ltd. and the respondent cited cases like CCE, Pondicherry v. National Oxygen Ltd. and Eicher Tractors v. CCE, Jaipur. It was argued that only the benefit of credit availed needed to be reversed on the transfer of capital goods, not the entire duty as contended by the Department. The Commissioner (A) set aside the original order based on limitations and merits.

3. The appellate judge reviewed the impugned order, submissions from both sides, and the relevant provisions and case laws. It was concluded that the rate of duty reversal at the time of receipt of capital goods/inputs was more reasonable than at the time of goods removal. The judge found no substantial merit in the Department's contention, stating that the impugned order was not erroneous. Consequently, the revenue's appeal was dismissed.

4. The judgment highlighted the importance of considering the rate of duty reversal at the time of receipt of goods, emphasizing the reasonableness of this approach over the rate applicable at the time of goods removal. The decision was based on a thorough analysis of the rule, case law, and arguments presented by both parties, ultimately leading to the dismissal of the revenue's appeal.