2007 (6) TMI 449 - AT - Central Excise

Cenvat/Modvat credit - Capital goods - old and used capital goods - Rule 3 of Cenvat Credit Rules - Held that - credit remains allowed

Summary

Issues:
- Valuation of capital goods for Cenvat credit reversal.

Analysis:
The appeal was directed against Order-in-Appeal No. AT/314/Bel/2006 dated 16-5-2006. Despite the respondent being served notice of hearing, no appearance was made on their behalf, leading to the appeal being taken up for disposal in the absence of the respondent due to the narrow compass of the issue. The ld. SDR reiterated that the capital goods cleared from the factory premises were undervalued, and the credit taken on these goods should have been reversed by the respondent under Rule 3 of Cenvat Credit. The respondent had availed Cenvat credit on the capital goods in April 98 and September 99, used them for manufacturing finished goods, and subsequently cleared them as old and used capital goods in 2004-2005.

The Commissioner (Appeals) found that the removal of capital goods after use for 6-7 years cannot be considered "removal as such." The credit on capital goods was availed under the Central Excise Rules, 1944, and the contention that the amount of credit required to be debited should be worked out as per erstwhile Rule 57-S was accepted. The Commissioner set aside the demand, citing the absence of a provision to demand duty on the removal of used Cenvated capital goods, as established in the Madura Coats case by CESTAT. Consequently, the impugned demand and penalty were set aside. The Commissioner's decision was upheld, and the order passed by the Commissioner (Appeals) was found to be correct, with no infirmity observed.

In conclusion, the Tribunal found no reason to interfere with the impugned order, deeming it correct and legal in the given circumstances. Therefore, the appeal filed by the revenue was rejected, and cross-objections were also disposed of accordingly.