2017 (4) TMI 88 - AT - Central Excise

Clearance of manufactured item (furnace) - capital items - removal as such or after being used - it is the Revenue s case that since the Appellant had removed the manufactured item (furnace), therefore, they were liable to pay excise duty on the transaction value - Held that - The subject goods have been in use in the factory of the Appellant for substantially long period. The goods were manufactured during September-November, 1995 and have been cleared by the Invoice dated 16.3.2004. When the Appellant used such goods for such a long period i.e. over eight years, the same cannot be called as manufactured or produced goods ; they are in the character of used capital goods‟. The department has not been able to prove that the Appellant assessee removed the goods as such or did not use these as capital goods. Thus, it is a fact that goods have been cleared after their use for long period - Appeal allowed - decided in favor of appellant.

Issues:
1. Liability to pay Central Excise Duty on manufactured goods.
2. Applicability of Notification No.67/95-CE for goods used for captive consumption.
3. Interpretation of goods as capital goods or manufactured products.
4. Dispute over duty payment based on transaction value.

Issue 1: Liability to pay Central Excise Duty on manufactured goods:
The case involved an appeal against the demand of Central Excise Duty, interest, and penalty imposed on the Appellant for the manufacture and clearance of a Stabilizer Furnace. The Department contended that the Appellant short paid the duty by not paying on the transaction value of the furnace, leading to the demand of duty amounting to ?15,41,007. The Appellant's argument was centered around the usage of the furnace for a long period, claiming it as a capital good and not a new manufactured product.

Issue 2: Applicability of Notification No.67/95-CE for goods used for captive consumption:
The Appellant asserted that the furnace was manufactured for captive consumption under the benefit of Notification No.67/1995 C.E. The dispute arose regarding the applicability of the notification if the goods were not used within the factory premises. The Revenue argued that once the goods were cleared from the factory premises, they lost the character of being for captive consumption, thus making the notification inapplicable.

Issue 3: Interpretation of goods as capital goods or manufactured products:
The Tribunal analyzed case laws cited by the Appellant, emphasizing that the subject goods, used in the factory for a substantial period, retained the character of 'used capital goods' rather than 'manufactured or produced goods.' The Tribunal noted that the Appellant had not removed the goods as such or ceased using them as capital goods, leading to the conclusion that the goods were cleared after a long period of use, not as newly manufactured products.

Issue 4: Dispute over duty payment based on transaction value:
The Revenue contended that Central Excise duty on the goods, manufactured and produced in India, should be levied based on the transaction value. However, the Tribunal, relying on previous decisions, including CESTAT Bangalore's ruling, held that there was no provision to demand duty on the removal of used Cenvated capital goods. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

In conclusion, the Tribunal ruled in favor of the Appellant, emphasizing the long-term use of the goods as capital goods and the absence of evidence proving their removal as manufactured products. The judgment highlighted the distinction between capital goods and newly manufactured goods, ultimately leading to the allowance of the appeal and setting aside the impugned order.

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