2018 (5) TMI 1110 - AT - Central Excise

CENVAT credit - write off of capital goods - Fixed asset destroyed in fire - Fixed assets/capital goods written off and cleared by the appellant from their factory - Fixed Assets/capital goods written off but not cleared by the appellant from their factory - rule 3(5B) of the Cenvat Credit Rules, 2004. Write off of Fixed asset destroyed in fire - Held that - there are no records that the appellant was claiming that there was fire incident in the factory, Adjudicating authority has recorded that appellant had not produced copy of FIR or Police Panchanama in order to complete action - matter needs reconsideration by the adjudicating authority to come to a conclusion as to whether the demand of duty would sustain as capital goods destroyed/damaged in fire accident - matter on remand. Fixed assets/capital goods written off and cleared by the appellant from their factory - Held that - the appellant had admitted damaged fixed assets were removed from the factory premises and the demand of duty needs to be upheld - the duty liability was discharged but there is a shortfall, the shortfall if any is required to be paid - demand upheld. Fixed Assets/capital goods written off but not cleared by the appellant from their factory - Held that - In the absence of any such plea, adjudicating authority could not have addressed the same, keeping in mind that there is a specific decision on this point, in order to appreciate factual position, the matter is remitted back to the adjudicating authority to consider this point and to arrive at a conclusion - matter on remand. Appeal disposed off.

Summary

Issues involved:
Demand of duty on disputed items - fixed assets destroyed in fire, fixed assets/capital goods written off and cleared, fixed assets/capital goods written off but not cleared.

Analysis:
1. Fixed assets destroyed in fire: The appellant claimed remission for fixed assets destroyed in a fire incident. However, the adjudicating authority required proof of the fire incident, such as a copy of FIR or Police Panchanama, which the appellant failed to provide. The Tribunal directed a reconsideration by the adjudicating authority to determine if the duty demand is valid for capital goods destroyed in a fire accident.

2. Fixed assets/capital goods written off and cleared: The appellant admitted that damaged fixed assets were removed from the factory premises, and a duty liability was acknowledged but not fully discharged. The Tribunal upheld the demand of duty amounting to ?7,31,817, to be paid by the appellant along with interest on the outstanding amount.

3. Fixed assets/capital goods written off but not cleared: The appellant argued that writing off fixed assets was solely for reducing the asset value in the balance sheet, with the assets still present in the factory premises. Referring to a previous Tribunal decision in favor of the appellant on a similar issue, the Tribunal remitted this matter back to the adjudicating authority for reconsideration. The adjudicating authority was directed to address this point and make a conclusion considering the specific decision and factual circumstances.

In conclusion, the Tribunal remitted matters related to points 1 and 3 back to the adjudicating authority for further consideration. For point 2, the demand of duty was confirmed along with interest. The appellant was granted the liberty to present arguments on the remitted issues, and the adjudicating authority was instructed to follow principles of natural justice in reaching a conclusion. The appeal was disposed of accordingly.