2012 (6) TMI 397 - AT - Central Excise

Reversal of the cenvat credit - the appellants had removed capital goods on which credit had been taken to another unit of the same company Held that - As this is a case where if the unit were to reverse the cenvat credit in its entirety also, the credit would have been taken in the other unit and therefore the situation was entirely revenue-neutral assessee s submission that the other unit was not making entire payment from cenvat credit alone thus the revenue neutrality situation would exist - there were no decisions during the relevant time giving the logic for payment of cenvat credit on the basis of depreciated value - when a transaction value is available, cenvat credit reversal has to be on the basis of transactional value even prior to the amendment - it cannot be said that there was suppression of fact or mis-declaration with intention to evade duty, thus confirmation of the demand cannot be sustained - in favour of assessee.

Summary

Issues:
1. Reversal of cenvat credit on transfer of capital goods within the same company.
2. Application of Rule 3(4) of Cenvat Credit Rules, 2002.
3. Interpretation of duty liability on used capital goods.
4. Suppression of facts and mis-declaration in duty payment.
5. Applicability of the decision in Geeta Industries Pvt. Ltd. case.
6. Revenue-neutrality of the situation.
7. Penalty imposition in the absence of an appeal by the Revenue.

Issue 1: Reversal of cenvat credit on transfer of capital goods within the same company.
The appellants had transferred capital goods to another unit within the same company, leading to a dispute regarding the reversal of cenvat credit taken on these goods. The department contended that the appellants were required to reverse the cenvat credit as per Rule 3(4) of Cenvat Credit Rules, 2002.

Issue 2: Interpretation of duty liability on used capital goods.
The counsel for the appellants argued that there was no provision for duty payment on used capital goods during the relevant period. The Commissioner's observations acknowledged the lack of clarity in the rules regarding duty on clearance of used capital goods, leading to contradictory decisions by the Tribunal.

Issue 3: Suppression of facts and mis-declaration in duty payment.
The department alleged suppression of facts by the appellants, citing the application of a fictitious transaction value for reversing cenvat credit on the transfer of capital goods. The Commissioner had set aside the penalty under section 11AC, indicating no suppression of facts or mis-declaration.

Issue 4: Applicability of the decision in Geeta Industries Pvt. Ltd. case.
The department argued that the decision in the Geeta Industries Pvt. Ltd. case, which involved the sale of capital goods after use, was applicable to the present case. However, the appellants contended that the circumstances of their case, involving transfer within the same company for use, distinguished it from the Geeta Industries case.

Issue 5: Revenue-neutrality of the situation.
The situation was deemed revenue-neutral as the duty paid by one unit was available as credit to the other unit upon transfer of capital goods. The absence of clear guidelines during the relevant period regarding cenvat credit based on depreciated value supported the appellants' case.

Issue 6: Penalty imposition in the absence of an appeal by the Revenue.
The absence of an appeal by the Revenue regarding penalty imposition led to the inability to press this aspect. The counsel for the department did not pursue the penalty issue due to the lack of an appeal filed by the Revenue.

In conclusion, the Tribunal found that the situation was revenue-neutral, and there was no intention to evade duty through suppression of facts or mis-declaration. The lack of clear provisions during the relevant period and contradictory Tribunal decisions supported the appellants' case. Consequently, the impugned orders were set aside, and the appeals were allowed in favor of the appellants with consequential relief.