2014 (6) TMI 651 - AT - Central Excise

Reversal of CENVAT Credit - Clearance of old and used capital goods to their other units on payment of duty on the transaction value - Held that - Larger Bench of the Tribunal in the case of CCE Vs. Navodhaya Plastic Industries Ltd. - 2013 (12) TMI 82 - CESTAT CHENNAI , following the decision of the Hon ble Madras High Court in the case of CCE Vs. Rogini Mills Ltd. - 2010 (10) TMI 424 - MADRAS HIGH COURT , held that reversal of CENVAT credit of 2.5% for each quarter of an year from the date of taking of CENVAT credit - matter should be examined in the light of the Larger Bench of the Tribunal in the case of Navodhaya Plastic Industries Ltd. (supra). Accordingly, I set aside the impugned orders and remand the matter back to the adjudicating authority to decide the matter afresh after considering the decision of the Larger Bench in the case of Navodhaya Plastic Industries Ltd. (supra) - Decided in favour of assessee.

Summary

Issues:
1. Liability to reverse CENVAT credit on old and used capital goods cleared to other units.
2. Applicability of Rule 3(5) of the CENVAT Credit Rules, 2004.
3. Interpretation of the decision in the case of CCE Vs. Navodhaya Plastic Industries Ltd.
4. Remand of the matter to the adjudicating authority for fresh consideration.

Analysis:
The judgment dealt with the issue of the appellant's liability to reverse the CENVAT credit on old and used capital goods cleared to other units. The adjudicating authority held that the appellant must reverse the entire credit originally taken on the impugned capital goods at the time of removal as per Rule 3(5) of the CENVAT Credit Rules, 2004. However, the judge referred to the decision of the Larger Bench in the case of CCE Vs. Navodhaya Plastic Industries Ltd. and the decision of the Hon'ble Madras High Court in the case of CCE Vs. Rogini Mills Ltd. The judge noted that the Larger Bench held that a 2.5% reversal of CENVAT credit for each quarter of a year from the date of taking the credit. Based on this interpretation, the judge set aside the impugned orders and remanded the matter back to the adjudicating authority for fresh consideration in light of the decision in the case of Navodhaya Plastic Industries Ltd. The appellant was to be given a reasonable opportunity of hearing before a new order was passed.

In conclusion, the judgment provided clarity on the reversal of CENVAT credit on old and used capital goods, emphasizing the need to follow the decision of the Larger Bench in similar cases. The remand of the matter for fresh consideration ensured that the appellant's rights were protected, and the adjudicating authority would make a decision in accordance with the legal precedents cited.