2009 (2) TMI 131 - AT - Central Excise

Demand and Recovery - Period of Limitation Reversal of Cenvat Credit Removal of Capital Goods as such - The Show Cause Notice issued proposing demand for differential duty had been issued in February, 2006 whereas the short reversal of credit/short-payment of duty had occurred on removal of capital goods in September, 2004. In view of the fact that the respondents had intimated particulars of payment of duty on removal of the capital goods in their monthly return for September, 2004, the allegation of suppression of fact cannot be held to have been substantiated. Therefore, the demand is barred by limitation. Demand is not sustainable.

Summary

The Appellate Tribunal CESTAT, CHENNAI issued an order in 2009 which vacated a demand for differential duty on capital goods. The respondents received a diesel generating set in 1994 and availed CENVAT credit. In 2004, the set was removed on sale, and duty was paid on the goods. The original authority demanded duty short-paid by the respondents, but the Commissioner (Appeals) vacated the demand, stating that removal of used capital goods was not removal of capital goods 'as such'. The Revenue appealed to the Tribunal, arguing that Rule 3(4)(c) of the CENVAT Credit Rules applied to removal of used capital goods. The Tribunal considered the case law and found that the demand was barred by limitation as the Show Cause Notice was issued after the short-payment occurred. The appeal was dismissed, and the cross-objections were also dismissed. The impugned order was upheld.