2008 (2) TMI 778 - AT - Central Excise

Summary

Issues: Appeal against denial of Cenvat credit for capital goods removed by the assessee.

Summary:
The appeal challenged the denial of Cenvat credit for capital goods removed by the assessee, based on the contention that the goods had been utilized for a long period and their removal did not attract duty payment as per Rule 3(4) of Cenvat credit rules. The Revenue disputed the transaction value used by the appellants for duty payment, instead opting for the value of the goods at the time of installation. The issue had been previously decided in favor of the assessee by the Tribunal in other cases.

The learned counsel for the appellant cited precedents where similar issues were decided in favor of the assessee by the Tribunal, and argued that the amended provisions should have only prospective effect. The Revenue, however, maintained that the amended law required the reversal of credit taken at the time of installation, but allowed for depreciation in the present case.

Upon careful consideration, the Tribunal found that the assessee was eligible for Cenvat credit on the used capital goods sold by them, as established in previous rulings. The subsequent amendment regarding depreciation had only prospective effect. The Tribunal referred to specific cases where similar issues were decided in favor of the appellants, and concluded that the impugned order was set aside and the appeal was allowed with consequential relief.

In a separate judgment, the Tribunal analyzed the removal of used capital goods and the application of depreciation. The Tribunal found that the appellants were not required to pay duty on the used machinery sold, as it did not fall under the provisions of Rule 3(4) of Cenvat Credit Rules. The Tribunal also noted that the show cause notice issued in the case was beyond the normal period and lacked justification, leading to the appeal being allowed and the impugned order being set aside.