9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 653 - AT - Central ExciseReversal of CENVAT Credit - capital goods removed as such - non-furnishing of documentary evidence in support of the contention that CENVAT/MODVAT credit on these capital goods, is not availed - suppression of material facts or not - HELD THAT - Appellant has cleared the capital goods which have been procured them in the year 1976 and thereafter for setting up their production facility at Kanjur. Subsequently during the period these capital goods were dismantled and removed by the appellant to their Mandideep unit after reversal of the credit on the depreciated value of the capital goods. It is fact of common knowledge that the Scheme of MODVAT Credit was introduced in the Year 1986 for the inputs and was in the year 1994 extended to the Capital Goods. Subsequently the scheme of MODVAT Credit was changed to CENVAT Credit scheme, and the scheme as was prevalent during the relevant period the scheme applicable was as laid down by the CENVAT Credit Rules, 2004. Commissioner has in the para 13, noted the above fact. In the case of the capital goods when the MODVAT Credit scheme was introduced, it was provided that person claiming the credit in respect of the Capital Goods was required to intimate about the receipt of Capital Goods and installation of the same to jurisdictional officers. Hence all the information in respect of the Capital Goods against which the MODVAT/ CENVAT Credit has been taken will be available with the revenue authorities. Noting the fact that the capital goods were removed by the appellant after having been put to use for considerable period of time, the approach adopted by the appellant to reverse the amount determined on the basis of book value of the capital goods, or depreciated value of capital goods cannot be faulted with. Revenue has not produced a single instance by referring to the credit account of the appellants to establish that these capital goods are the one against which they have actually taken the credit, and these goods have been cleared as such. On the contrary they have hypothetically calculated the amount of the credit to be reversed by denying the depreciation as claimed by the appellant while clearing these capital goods to their Mandideep unit. The fact of utilization and condition of these capital goods could have been easily verified by the revenue authorities at the time of their clearance from the Kanjur Marg unit of the appellant or could have been subsequently verified at the Mandideep unit. The issue is found completely revenue neutral as the quantum of duty/ credit reversed will be available as credit to the appellant unit at Mandideep - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Validity of demand for differential duty on capital goods cleared after depreciation. 2. Applicability of interest and penalty under CENVAT Credit Rules and Central Excise Act. 3. Allegation of suppression of facts and invocation of extended period for demand. 4. Concept of revenue neutrality in the context of CENVAT Credit. Issue-wise Detailed Analysis: 1. Validity of demand for differential duty on capital goods cleared after depreciation: The appellant, a manufacturer of electric motors and generators, cleared capital goods from their factory to another unit and other customers, calculating duty based on depreciated value. The department contended that the appellant should have reversed the credit based on the original purchase value, as per Rule 3(5) of the CENVAT Credit Rules, 2004. The appellant argued that the capital goods were procured before the introduction of the MODVAT/CENVAT scheme and hence no credit was availed. The tribunal noted that the appellant provided evidence that the capital goods were old and used, and the department failed to prove that the appellant had taken credit on these goods. The tribunal held that the appellant's method of reversing credit based on depreciated value was correct, referencing several case laws supporting the view that used capital goods should not be treated as removed "as such." 2. Applicability of interest and penalty under CENVAT Credit Rules and Central Excise Act: The Commissioner imposed interest and a penalty equal to the demanded duty, citing Rule 14 of the CENVAT Credit Rules and Section 11AC of the Central Excise Act. The appellant argued that there was no suppression or fraudulent intent, as the clearances were reflected in monthly returns. The tribunal found that the department could not establish any suppression or intent to evade duty by the appellant. Consequently, the tribunal set aside the interest and penalty imposed. 3. Allegation of suppression of facts and invocation of extended period for demand: The department alleged that the appellant suppressed facts by not showing the original purchase value in clearance invoices and ER-1 returns, justifying the invocation of the extended period under Section 11A. The appellant countered that the department was aware of the clearances and the method of depreciation used. The tribunal observed that the department had full knowledge of the transactions through monthly returns and correspondence. The tribunal concluded that there was no suppression or intent to evade duty, rendering the invocation of the extended period unjustified. 4. Concept of revenue neutrality in the context of CENVAT Credit: The appellant argued that the matter was revenue neutral, as any duty paid would be available as credit to their other unit. The Commissioner dismissed this argument, stating that revenue neutrality is not a consideration under Section 11A or Rule 14. The tribunal, however, recognized the concept of revenue neutrality, noting that the appellant's other unit could avail the credit, making the entire exercise futile. The tribunal referenced several case laws supporting the view that revenue neutrality should be considered, especially when the duty paid is available as credit to the same entity. Conclusion: The tribunal set aside the impugned order, allowing the appeal. It held that the appellant correctly reversed credit based on depreciated value, there was no suppression of facts, and the matter was revenue neutral. The demand for differential duty, interest, and penalty was found unsustainable. The tribunal emphasized that the department failed to provide evidence that the appellant had taken credit on the capital goods in question. The tribunal's decision was based on a thorough analysis of legal provisions, case laws, and the specific facts of the case.
|
