2016 (11) TMI 1168 - AT - Central Excise

Demand of differential duty - Capital goods cleared as such - whether on clearance of the capital goods after being put to use for more than six years, the CENVAT credit availed at the time of its receipt, should be reversed or the duty on the depreciated value of the capital goods as on the date of clearance from the factory be required to be paid? - Held that - the CBEC Circulars issued from time to time, clarified that the depreciated value be considered for recovery of the CENVAT credit on the clearance of the capital goods, after being put to use - the matter needs to be remanded to the adjudicating authority to re-determine the quantum of credit required to reversed in the light of Board s Circular. Period of limitation - Held that - The aspect of limitation though considered by adjudicating authority but not addressed by the Ld. Commissioner (Appeals) in the impugned order. On a query from the bench about the claim of the respondent that whether they have disclosed all the facts to the department, the ld. Consultant for Respondent submits they may be allowed a chance to place necessary evidences during the remand proceeding before the adjudicating authority and requested that all issues be kept open. Appeal allowed by way of remand.

Issues Involved:
1. Reversal of CENVAT credit on clearance of capital goods.
2. Duty payment on depreciated value of capital goods.
3. Bar on recovery of CENVAT credit after a certain period.
4. Consideration of relevant legal precedents and CBEC Circulars.
5. Remand to adjudicating authority for redetermination.

Analysis:

1. Reversal of CENVAT Credit: The appeal involved a dispute regarding the reversal of CENVAT credit availed on capital goods when cleared after being used for several years. The Revenue contended that the credit should be reversed at the time of clearance, while the Respondent argued that as the goods were not cleared "as such" but after being used, the credit should not be reversed at the transaction value. The Tribunal referred to legal precedents and CBEC Circulars to determine that the duty should be paid on the depreciated value of the goods at the time of clearance, following the principles established in relevant judgments.

2. Duty Payment on Depreciated Value: The central issue was whether duty should be paid on the transaction value or the depreciated value of the capital goods cleared after being in use for an extended period. The Tribunal relied on judgments from the Madras High Court and its Larger Bench to support the argument that duty should be calculated based on the depreciated value of the goods. This approach was further reinforced by CBEC Circulars that emphasized considering the depreciated value for recovering CENVAT credit on capital goods cleared after being utilized.

3. Bar on Recovery of CENVAT Credit: The Respondent raised a defense regarding the limitation period for recovering CENVAT credit on the clearance of capital goods. They argued that the demand issued in 2008 for goods cleared in 2006 was time-barred. While this aspect was considered by the adjudicating authority, the Ld. Commissioner (Appeals) did not address it in the impugned order. The Tribunal acknowledged this issue and remanded the case to the adjudicating authority to reconsider all aspects, including the limitation aspect.

4. Consideration of Legal Precedents and Circulars: The Tribunal extensively discussed and applied legal precedents, such as the judgments from the Madras High Court and the Tribunal's Larger Bench decision, to support its conclusion on the appropriate method for calculating duty on cleared capital goods. Additionally, the Tribunal highlighted the significance of CBEC Circulars that clarified the treatment of depreciated value in recovering CENVAT credit, further strengthening the decision to remand the case for a comprehensive redetermination.

5. Remand to Adjudicating Authority: Ultimately, the Tribunal decided to remand the matter to the adjudicating authority for a thorough reconsideration of all aspects, including the limitation issue. The decision to allow the Revenue's appeal by way of remand was based on the need to address all relevant factors and ensure a fair and comprehensive resolution of the dispute, as requested by the Respondent's consultant to present necessary evidence during the remand proceedings.

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