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2018 (9) TMI 1573 - AT - Central ExciseCENVAT credit - clearance of capital goods after use - whether the appellant, on the clearance of capital goods after use for substantial period, is required to pay duty or otherwise in terms of Rule 3(5) of Cenvat Credit Rules, 2004? - determination of CENVAT Credit by taking into account depreciation, justified or not? Held that - In the earlier order, Tribunal has held that there would be duty liability, the matter was remanded for re-quantification after considering depreciation, therefore, issue on demand of cenvat credit which was re-quantified by adjudicating authority is not open for fresh decision - demand upheld. Penalty u/s 11AC - Held that - The matter was not free from doubt which is evident from the remand order of the Tribunal itself that on the same issue, the matter referred to the Larger Bench wherein it was decided that duty is payable after considering depreciation - It is also fact that the demand of duty was raised for normal period. Considering all these facts, it is clear that there is no suppression of fact on the part of appellant - Penalty not justified. Demand of Interest - Held that - As per the provision existing during the relevant period under Rule 14 even if the assessee does not utilize the credit wrongly availed but if it is availed then also the interest was chargeable - demand of Interest upheld. Appeal allowed in part.
Issues Involved:
1. Interpretation of Rule 3(5) of Cenvat Credit Rules, 2004 regarding duty liability on clearance of capital goods after use. 2. Imposition of penalty under Section 11AC. 3. Demand of interest on cenvat credit availed but not utilized. Analysis: Issue 1: Interpretation of Rule 3(5) of Cenvat Credit Rules, 2004 The Tribunal had previously remanded the matter to the adjudicating authority to re-determine the cenvat credit quantum, considering depreciation, as per the case law of Navodhaya Plastic Industries Limited. The appellant challenged this decision before the High Court, which is pending. The adjudicating authority re-quantified the duty and imposed a penalty under Section 11AC along with interest. The appellant argued that the penalty should not have been imposed as there was no suppression of facts and relied on various judgments to support their case. The Tribunal upheld the demand confirmed by the lower authority, stating that there is no prescribed method in Rule 3(5) for calculating duty on removal of used capital goods. The Tribunal also found no suppression of facts by the appellant and set aside the penalty under Section 11AC. Issue 2: Imposition of Penalty under Section 11AC The Tribunal observed that the issue of duty liability on used capital goods had been previously referred to a Larger Bench for interpretation, which concluded that duty is payable after considering depreciation. Considering the lack of clarity in Rule 3(5) and the fact that the demand was raised for a normal period, the Tribunal deemed the penalty under Section 11AC as illegal and incorrect, ultimately setting it aside. Issue 3: Demand of Interest on Cenvat Credit Regarding the demand of interest on cenvat credit availed but not utilized, the Tribunal referred to Rule 14, which during the relevant period required charging interest even if the credit was availed but not utilized. Citing a Supreme Court case, the Tribunal upheld the demand of interest on the cenvat credit confirmed by the adjudicating authority, disagreeing with the appellant's argument that interest should not be charged in such circumstances. Consequently, the appeal was partly allowed, upholding the demand of interest on the cenvat credit. In conclusion, the Tribunal's decision addressed the interpretation of Rule 3(5) in the context of duty liability on used capital goods, the imposition of penalty under Section 11AC, and the demand of interest on cenvat credit availed but not utilized, providing a detailed analysis and reasoning for each issue.
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