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2016 (8) TMI 751 - AT - Central ExciseWhether the appellant is liable to reverse cenvat credit on capital goods when the capital goods are removed after being used for a period of about one year also - Held that - the capital goods was imported on 14.03.2006 and was used for a year and then cleared on 10.04.2007 without payment of duty under the belief that there was no provision in the Cenvat Credit Rules 2004 to pay cenvat either in full or depreciated amount of cenvat during the relevant period. By respectfully following the ratio of the Karnataka High Court, in the case of CCE, Bangalore II Vs. Solectron Centum Electronics Ltd. 2014 (10) TMI 596 - KARNATAKA HIGH COURT , prior to amendment effected on 13.11.2007, the assessee is liable to pay duty on removal of used capital goods. Therefore, the impugned order do not sustain and is set aside. Invokation of extended period of limitation - Held that - the ratios of the judgments states that when there are conflicting decisions of the Tribunal and also of the High Courts on a particular issue, the extended period is not invocable. Therefore following the ratio in the above cited judgments, I hold that the show-cause notice in this particular case is beyond limitation and the demand is time-barred. - Decided in favour of appellant
Issues: Appeal against dismissal of appeal by Commissioner (Appeals) upholding Order-in-Original regarding demand for payment of duty on clearance of used capital goods without payment under Cenvat Credit Rules 2004. Interpretation of Rule 3(5) of Cenvat Credit Rules 2004 before and after the amendment on 13.11.2007. Applicability of limitation period for demand of duty on clearance of used capital goods.
Analysis: 1. The appeal challenged the order dismissing the appellant's appeal and upholding the demand for payment of duty on the clearance of used capital goods without payment, as per the Cenvat Credit Rules 2004. The appellant imported Full Power Double Side planner without spiral cutters and cleared it without duty payment based on the belief that no provision existed at the time for such payment. A show-cause notice was issued proposing a demand, which was confirmed by the adjudicating authority and upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal. 2. The appellant argued that the impugned order contradicted established law and precedents set by various High Courts. They contended that prior to the amendment on 13.11.2007, there was no obligation to pay duty on the removal of used capital goods under the Cenvat Credit Rules 2004. Citing relevant case laws and judgments, the appellant emphasized that the interpretation applied by the authorities would defeat the purpose of granting modvat credit for capital goods. Additionally, they argued that the demand was beyond the limitation period based on the date of clearance of the used capital goods. 3. The respondent supported the findings in the impugned order, citing judgments where it was held that duty is payable when used capital goods are removed. The Tribunal analyzed the provisions of the Cenvat Credit Rules 2004 before and after the amendment on 13.11.2007. It noted that the proviso added to the Rules clarified the liability to pay duty on used capital goods removed, which was not explicitly stated before the amendment. The Tribunal referred to various High Court judgments interpreting the term "as such" in the Rules to support its decision. 4. Considering the arguments and precedents, the Tribunal concluded that prior to the 13.11.2007 amendment, there was no duty payable on the removal of used capital goods. Relying on the judgment of the Karnataka High Court, the Tribunal held that the impugned order was not legally sustainable and set it aside. Regarding the limitation period, the Tribunal found the show-cause notice to be beyond limitation based on the conflicting decisions of various High Courts, leading to the demand being time-barred. Consequently, the appeal was allowed on both merit and limitation grounds, providing consequential relief to the appellant.
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