2012 (11) TMI 1013 - AT - Central Excise

CENVAT Credit - Goods destroyed in fire - Whether, in respect of certain capital goods which were used by the respondent for the manufacture of excisable goods over a period of time and subsequently happened to be destroyed in a major fire accident on 25/01/2006, they are liable to pay an amount equal to the CENVAT credit or an amount proportionate to the depreciated value of the capital goods - Held that - respondent has mainly relied on the Hon ble Karnataka High Court s decision in CCE, Bangalore vs. Tata Advanced Materials Ltd. 2011 (4) TMI 1124 - KARNATAKA HIGH COURT . It is fairly conceded by the learned Superintendent(AR) that the decision cited by the respondent is one rendered by the Hon ble High Court in the Central Excise appeal filed by the Department in the case of Tata Advanced Materials Ltd. - Decided against Revenue.

Summary

Issues:
1. Liability of a party for destroyed capital goods on which CENVAT credit was availed.
2. Interpretation of relevant legal provisions and precedents regarding the payment of CENVAT credit in case of destroyed capital goods.

Issue 1: Liability of a party for destroyed capital goods on which CENVAT credit was availed

The case revolved around the question of whether a party, who had availed CENVAT credit on certain capital goods that were subsequently destroyed in a fire accident, was liable to pay an amount equal to the CENVAT credit or an amount proportionate to the depreciated value of the goods. The original authority demanded a specific amount equal to the proportionate credit on the capital goods, along with interest and a penalty. The appellate authority, however, allowed the appeal of the aggrieved party, citing precedents such as Tata Advance Materials vs. CCE, Bangalore-I, which highlighted the absence of a provision for demanding CENVAT credit on destroyed capital goods after a period of use. The Department raised an appeal against this decision, arguing that it did not accept the Tribunal's decision in the Tata Advance Materials case and hence preferred an appeal to the Karnataka High Court.

Issue 2: Interpretation of relevant legal provisions and precedents

During the proceedings, the appellant was represented by the Superintendent(AR), while there was no representation for the respondent. However, the respondent's written submissions referenced the Karnataka High Court's decision in CCE, Bangalore vs. Tata Advanced Materials Ltd. The Superintendent(AR) acknowledged that the cited decision was rendered by the High Court in a Central Excise appeal filed by the Department in the Tata Advanced Materials case. The issue at hand in the current case was found to be identical to one of the substantial questions of law framed by the High Court, which had been answered in favor of the assessee and against the Revenue. Consequently, the appeal of the Department was dismissed, affirming the decision in line with the High Court's interpretation and precedent.

This comprehensive analysis of the judgment highlights the key issues of liability for destroyed capital goods and the interpretation of legal provisions and precedents, ultimately leading to the dismissal of the Department's appeal based on the High Court's decision in a similar case.