2017 (6) TMI 847 - AT - Central Excise

Clearance of capital goods without payment of duty - demand of duty with interest and penalty - Held that - capital goods was acquired a long back by the appellant. No depreciation has been allowed to the appellant when the capital goods have been cleared after used. Therefore, the demand against the appellant on this account is not sustainable - the contention of the appellant is that they have not taken the Cenvat Credit on these capital goods. The said fact remained un-verified at the end of the Adjudicating Authority, in that circumstances, benefit of doubt goes in the favor of the appellant - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against confirmed demand for clearance of capital goods without payment of duty or reversal of Cenvat Credit.

Analysis:

1. Facts of the Case: During 2010, the appellant cleared certain capital goods without paying duty or reversing Cenvat Credit. Subsequently, it was discovered during an audit that duty had not been paid on these goods, leading to initiation of proceedings against the appellant.

2. Appellant's Contentions: The appellant argued that since they had not availed Cenvat Credit on the capital goods, they were not obligated to pay duty at the time of clearance. They presented statutory documents as evidence, including entries in the RG-23 Part-II register indicating non-availment of credit. The appellant also mentioned that due to record damage in 2013, they were unable to produce certain documents during the investigation.

3. Revenue's Argument: The Revenue contended that the appellant failed to provide invoices and sufficient proof of non-availment of Cenvat Credit, thereby justifying the confirmation of the demand.

4. Judgment: The Tribunal noted that a demand of ?95,538/- was confirmed against the appellant for the value of the capital goods in question, acquired long ago. The Tribunal observed that no depreciation had been allowed to the appellant for the goods cleared after use, making the demand unsustainable. Additionally, since the appellant had not availed Cenvat Credit on the goods, and this fact was not verified by the Adjudicating Authority, the benefit of doubt was given to the appellant. Consequently, the Tribunal set aside the impugned demand and allowed the appeal with any necessary consequential relief.

This judgment highlights the importance of proper documentation and verification in cases involving clearance of goods without payment of duty or reversal of credits, emphasizing the need for authorities to consider all relevant evidence before confirming demands.