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2019 (5) TMI 1350 - AT - Service TaxCENVAT Credit - capital goods - transfer and merger - capital goods have been transferred to the group company and the same were used by the appellant for providing output service - Rule 3 (5) of the Cenvat Credit Rules, 2004 - extended period of limitation - HELD THAT - It is a fact on record that these capital goods have not been removed from the premises where they were initially installed. Reliance placed in appellant own case M/S. VODAFONE MOBILE SERVICES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD 2017 (12) TMI 29 - CESTAT AHMEDABAD , where it was held that appellant is not required to reverse the Cenvat credit as the goods have not been physically removed from their premises to their sister unit. Thus, the appellant is not required to reverse Cenvat credit as the capital goods have not been physically removed from the premises where they were initially installed. Extended period of limitation - HELD THAT - The whole of duty has been confirmed by invoking the extended period of limitation - the extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.
Issues:
1. Denial of Cenvat credit on capital goods due to transfer under a scheme of arrangement. 2. Interpretation of Rule 3(5) of the Cenvat Credit Rules, 2004 regarding reversal of credit. 3. Relevance of physical removal of capital goods for Cenvat credit eligibility. 4. Application of Revenue neutrality principle in the case. Analysis: 1. The appellant appealed against the denial of Cenvat credit on capital goods transferred under a scheme of arrangement. The appellant, engaged in telecommunication services, argued that ownership of capital goods is irrelevant for Cenvat credit eligibility. The issue revolved around whether the appellant should reverse the credit under Rule 3(5) of the Cenvat Credit Rules, 2004, post transfer to another entity. 2. The Tribunal referred to previous judgments and observed that physical removal of goods is crucial for determining credit reversal under Rule 3(5). Citing the decision of the Hon'ble Apex Court in J.K. Spinning and Weaving Mills case, the Tribunal emphasized that physical movement of goods constitutes removal. It was noted that invoices lacked details required for credit availing, and hence, no reversal was justified. The Tribunal concluded that the appellant was not obligated to reverse Cenvat credit due to the absence of physical removal of capital goods. 3. The Tribunal highlighted the Revenue neutrality aspect, stating that the transfer to a sister unit maintained Revenue neutrality. Citing the case of Indeos ABS Limited, the Tribunal emphasized that the duty paid was available as credit to the sister unit, making the process Revenue neutral. Consequently, the Tribunal held that the appellant was not required to reverse the Cenvat credit due to the transfer to the sister unit. 4. Lastly, the Tribunal addressed the invocation of the extended period of limitation, ruling that it was not applicable in this case. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief. The decision was made based on the analysis of the relevant legal provisions and precedents, ensuring a fair and just outcome for the appellant.
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