2007 (4) TMI 52 - AT - Central Excise

Refund of duty Revenue contended that manufacture is to reverse the Cenvat credit availed at the time of receipt of the capital goods in case of capital goods removed from their factory Held that revenue contention is right

Summary

Issues involved: Application for waiver of pre-deposit of duty and penalty under Cenvat Credit Rules.

Analysis:

The judgment by the Appellate Tribunal CESTAT, New Delhi, involved an application for the waiver of pre-deposit of duty amounting to Rs. 81,62,763/- and an equal penalty. The applicant had availed credit for capital goods which were subsequently removed to other units after payment of duty at the depreciated value. The Revenue contended that under the Cenvat Credit Rules, a manufacturer working under the Cenvat Scheme must reverse the credit availed when capital goods are removed from the factory. The applicant cited a previous Tribunal decision in a different case, but the Tribunal found that the facts of that case were not applicable to the present situation. The Tribunal noted that the applicant was not a 100% Export Oriented Unit (EOU) and, as per the relevant rules, the manufacturer was required to reverse the credit on capital goods at the time of removal from the factory. Consequently, the Tribunal ruled that the applicant had no grounds for a waiver of the pre-deposit of duty and directed them to deposit the full amount within 8 weeks. However, upon depositing the duty amount, the pre-deposit of penalty was waived for the appeal hearing, which was adjourned for compliance reporting on a specified date.

This judgment underscores the importance of complying with the specific provisions of the Cenvat Credit Rules regarding the reversal of credit on capital goods when they are removed from the factory. It highlights the Tribunal's careful consideration of the applicable rules and previous decisions in determining the outcome of the case. The ruling serves as a reminder to manufacturers to adhere to the prescribed procedures to avoid potential liabilities and penalties.