2015 (2) TMI 41 - AT - Central Excise

Difference of transaction value at the time of clearance and credit taken Revenue was of the view that as per Rule 3 (5) of Cenvat Credit Rules 2004 when capital goods on which Cenvat credit had been taken were removed from the factory, the manufacturer of the final product shall pay an amount equal to the credit availed Held that - Following decision of CCE, Hyderabad-III Vs. Navodhaya Plastic Industries Ltd. 2013 (12) TMI 82 - CESTAT CHENNAI - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
- Interpretation of Cenvat Credit Rules regarding the removal of used capital goods and payment of duty.
- Applicability of the decision of the Larger Bench in a specific case.
- Consideration of changes in the law during different periods.

Interpretation of Cenvat Credit Rules:
The appellants, engaged in manufacturing 'Gears and Gear Boxes,' imported machineries as capital goods in 1999, 2001, and 2003, availing Cenvat Credit. Upon selling the used capital goods in 2005 and 2006, duty was paid based on the transaction value. A Show Cause Notice in 2006 proposed demanding duty equal to the credit availed on those capital goods. The issue was previously decided by the Larger Bench, emphasizing the interpretation of the Rules applicable during the material period. The Revenue argued for a strict interpretation of the Rule in force at that time.

Applicability of Larger Bench Decision:
The Larger Bench's decision in the case of Navodhaya Plastic Industries Ltd. was considered, highlighting the Rules applicable during different periods. The Tribunal emphasized the need to examine the case in light of the decision of the Larger Bench. The argument that the department accepted the decision of the Madras High Court in a similar case based on monetary involvement rather than merits was not accepted. The Tribunal upheld the decision following the Madras High Court's ruling.

Consideration of Changes in Law:
The Tribunal acknowledged the changes in the law over different periods regarding the payment of duty on removed capital goods with availed Cenvat Credit. The matter was remanded back to the adjudicating authority to reconsider the case in line with the decision of the Larger Bench. The authority was instructed to provide a proper opportunity for the appellant to present their case before issuing a new order. The appeal was allowed via remand, and the stay application was disposed of accordingly.