2011 (7) TMI 470 - AT - Central Excise

Cenvat credit - Clearance of the used and old capital goods - Such capital goods were cleared by the respondent on payment of duty on transaction value - Revenue wanted them to pay back the entire CENVAT Credit originally availed by them at the time of receipt of capital goods in their factory - the CENVAT Credit taken at the time of receipt of the capital goods in the factory is not required to be reversed but duty is required to be paid on the transaction value of the used capital goods cleared under Rule 3(5) of the CENVAT Credit Rules, 2004 - This has already been done by the appellants in the present cases - Decided against the revenue.

Summary

Issues:
- Appeal against Commissioner(Appeals) order allowing respondent's appeal regarding clearance of used and old capital goods on which CENVAT Credit was availed.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Ahmedabad involved the issue of clearance of used and old capital goods on which the respondent had previously availed CENVAT Credit. The Revenue contended that the entire CENVAT Credit originally availed by the respondent at the time of receiving the capital goods should be paid back when the goods were cleared by the respondent on payment of duty on transaction value. However, the Commissioner(Appeals) allowed the respondent's appeal based on legal precedents. The Commissioner(Appeals) referred to the decision of the Bombay High Court in the case of Commissioner Vs. Cummins India Ltd., which upheld the CESTAT's decision. It was held that under Rule 3(5) of the CENVAT Credit Rules, 2004, duty is required to be paid on the transaction value of the used capital goods cleared, without the need to reverse the CENVAT Credit taken at the time of receiving the goods.

The Commissioner(Appeals) further relied on the decision of CESTAT Ahmedabad in the case of CCE Vapi Vs. Jolly Containers, which supported the appellants' case. The Tribunal noted that the Revenue did not challenge the applicability of the decisions relied upon by the Commissioner(Appeals) to the present case in their appeal memo. As the Commissioner(Appeals) had followed the legal principles declared by the Tribunal and upheld by the Bombay High Court, the Tribunal found no error in the Commissioner's views. Consequently, the Tribunal rejected the Revenue's appeal against the order of the Commissioner(Appeals) and upheld the decision in favor of the respondent regarding the clearance of used and old capital goods without the reversal of CENVAT Credit but payment of duty on transaction value as per Rule 3(5) of the CENVAT Credit Rules, 2004.