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2010 (10) TMI 972 - AT - Central Excise
Issues Involved:
Interpretation of Rule 3(5) of the Central Credit Rules, 2004 in relation to the payment of duty on capital goods used for a certain period. Analysis: The appeal was filed by the Revenue challenging the decision of the Commissioner (Appeals) who dropped the demand against the respondent based on the judgment in Madura Coats Pvt. Ltd. v. CCE. The Commissioner held that duty should be paid on the transaction value at the time of clearance of capital goods, which had been used by the respondent for almost five years in accordance with Rule 3(5) of the Central Credit Rules, 2004. The Department's representative argued that the decision in Madura Coats Pvt. Ltd. is under challenge before the Hon'ble Madras High Court, and hence, requested to keep the appeal pending. However, upon hearing both sides, the Tribunal made a query to the Departmental Representative regarding the status of the Madura Coats Pvt. Ltd. case before the High Court. It was revealed that no stay had been granted by the High Court, and the representative sought time to ascertain the status of the appeal. In the case of Cummins India Ltd. v. CCE, the Tribunal had previously dealt with a similar issue, holding that the provisions of Rule 3(4) of Cenvat Credit Rules, 2002 and Rule 3(5) of Cenvat Credit Rules, 2005 do not apply to the removal of capital goods after use, where duty has been paid on the transaction value. This view was upheld by the Mumbai High Court in a subsequent case. Consequently, the Tribunal found no merit in the Department's appeal and rejected the same, affirming the decision of the Commissioner (Appeals). The judgment highlights the importance of interpreting and applying the relevant rules concerning the payment of duty on capital goods, especially in cases where goods have been used for a significant period before clearance. It also underscores the significance of precedent set by previous decisions in similar matters, providing clarity and consistency in tax-related disputes.
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