2010 (8) TMI 432 - AT - Central Excise

Waiver of pre-deposit - clearance of capital goods as such - reversal of cenvat credit - rule 3(5) of CCR - Held that - whenever the purposes for which the capital goods are removed as such from the factory, an amount equal to the credit taken in respect of such goods is required to be paid by the party. The allegations raised in the show-cause notice are that the fact that any amount equal to CENVAT credit taken on the capital goods had not been paid was not disclosed by the appellant while exporting the goods. It was also alleged that the relevant invoice was not produced. Obviously, the export was made under free shipping bill. The Revenue has not shown to us that there was a legal requirement of the exporter having to disclose in the shipping bill as to whether they had paid an amount equal to CENVAT credit availed on the capital goods (export goods) or not. If there was no such requirement, it cannot be said that the appellant/exporter suppressed the above fact by not declaring the same in the shipping bill. - Pre deposited waived fully.

Issues:
1. Waiver of pre-deposit and stay of recovery in respect of duty and penalty.
2. Interpretation of the expression "as such" in Rule 3(5) of the CENVAT Credit Rules, 2004.
3. Time-bar against the demand for duty on exported capital goods.

Analysis:

Issue 1 - Waiver of Pre-deposit and Stay of Recovery:
The appellant sought waiver of pre-deposit and stay of recovery for duty exceeding Rs. 1.6 crores and an equal penalty. The demand was related to old/used capital goods exported under bond. The appellant argued that they were not liable to pay an amount equal to the credit taken on capital goods removed after long use. The Tribunal's interpretation of the expression "as such" was crucial in determining liability. The appellant's plea for waiver was granted based on the ground of limitation, as the show-cause notice was issued beyond the normal period, and the appellant had not suppressed any relevant information during export.

Issue 2 - Interpretation of "As Such" in Rule 3(5):
The dispute centered around the interpretation of the term "as such" in Rule 3(5) of the CENVAT Credit Rules, 2004. The appellant argued that the capital goods were not cleared "as such" for export, thus challenging the demand for payment equal to the credit availed on such goods. The Tribunal's Larger Bench decision clarified that even used capital goods fell under the purview of "as such," meaning in the original form without any alteration. This interpretation favored the Revenue's position, requiring the appellant to pay the amount equal to the credit taken on the exported capital goods.

Issue 3 - Time-bar Against the Demand:
The appellant contended that the demand for duty on exported capital goods was time-barred, as there was no intent to evade payment, and nothing was suppressed before the department. The show-cause notice was issued beyond the normal limitation period, alleging non-disclosure of the payment of CENVAT credit on the goods during export. The Tribunal found merit in the appellant's argument, noting that there was no legal requirement to disclose such information in the shipping bill. Consequently, the waiver of pre-deposit and stay of recovery was granted in favor of the appellant based on the limitation aspect.

In conclusion, the Tribunal's decision favored the appellant on the ground of limitation, granting waiver of pre-deposit and stay of recovery concerning the duty and penalty amounts in question. The interpretation of the term "as such" in Rule 3(5) of the CENVAT Credit Rules, 2004 played a significant role in determining the appellant's liability for payment equal to the credit availed on the exported capital goods.

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