2017 (2) TMI 1160 - AT - Central Excise

CENVAT credit - the appellant had shifted/transferred used capital goods from their Lambha factory to their another factory at Odhav, without reversal of the credit at their Lambha unit - Held that - Appellant fairly accepts to reverse the credit at Lambha Unit and avail at Odhav and regularize the procedural lapse. The Appellant is accordingly directed to do so and intimate the department accordingly - demand upheld for normal period. Penalty u/s 11AC of CEA,1944 read with Rule 15 of CCR,2004 - Held that - the appellant under the bonafide impression did not reverse the credit after due intimation of removal of the capital goods to the Dept. In these circumstances, penalty u/s 11AC of CEA,1944 read with Rule 15 of CCR,2004 is not attracted. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues: Appeal against demand for reversal of credit on shifted capital goods without penalty.

In this case, the appellant shifted used capital goods from one unit to another without reversing the credit availed on those goods, leading to a demand for reversal of credit, interest, and penalty. The appellant argued that the transfer did not constitute clearance, as the goods were used, and therefore, Rule 3(5) of CCR, 2004 did not apply. The appellant cited a precedent where a similar situation was considered a procedural lapse, not warranting duty demand. The tribunal found the circumstances similar to the precedent and directed the appellant to reverse the credit at the original unit and avail it at the new unit, without imposing a penalty under Section 11AC of CEA,1944 read with Rule 15 of CCR, 2004, due to the appellant's bonafide belief and lack of other penal provisions invoked. The appeal was disposed of accordingly.