2017 (11) TMI 1383 - AT - Central Excise

CENVAT credit - whether the appellant herein is required to reverse the cenvat credit availed on the capital goods which were exported after putting them to use? - Held that - There are no provisions, in the Cenvat Credit Rules or Central Excise Rules which prohibits an export of capital goods which are put to use. In the absence of any such provision, the confirmation of the demand of reversal of cenvat credit availed on the capital goods when they were received by the appellant in their factory seem to be erroneous and unsustainable - demand set aside. Whether the capital goods removed for home consumption the duty liability arises or otherwise? - Held that - On the basis of such documentary evidence to show that they have paid more duty than the amount which is demanded in the show-cause notice, I find that both the lower authorities were fell in error of law in coming to a conclusion that the appellant is required to pay Central Excise demand of ₹ 56,764/- with interest - demand set aside. Appeal allowed in part.

Summary

Issues:
1. Whether the appellant is required to reverse the cenvat credit availed on capital goods exported after use.
2. Whether duty liability arises on capital goods removed for home consumption.

Analysis:
1. The main issue in this case was whether the appellant should reverse the cenvat credit on capital goods exported after use. The appellant had exported three capital goods after putting them to use, but the Revenue authorities contended that goods can only be exported "as such." The Tribunal found that there were no provisions prohibiting the export of used capital goods in the Cenvat Credit Rules or Central Excise Rules. Therefore, the demand for reversal of cenvat credit on the exported capital goods was deemed erroneous and unsustainable. The confirmation of this demand by the lower authorities was considered a misdirection, leading to the appeal being allowed.

2. Another issue was the duty liability on capital goods removed for home consumption. The appellant was facing a demand of ?56,764 based on the transaction value of the capital goods, while they had already paid ?70,040 as duty liability. The Tribunal observed that the lower authorities had erred in dismissing the appellant's plea without considering the documentary evidence provided. The appellant had paid more duty than the amount demanded in the show-cause notice, as evidenced by the tax invoice and monthly returns. Consequently, the Tribunal found that the demand for ?56,764 was unjustified, and the lower authorities had made an error of law in upholding it. Therefore, the impugned order was set aside, and the appeal was allowed based on the unsustainable nature of the decision.

In conclusion, the Tribunal found in favor of the appellant on both issues, ruling that the demand for reversal of cenvat credit on exported capital goods after use was unfounded, and the demand for duty liability on capital goods removed for home consumption was not justified. The impugned order was set aside, and the appeal was allowed.