9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (8) TMI 890 - HC - Central ExciseDemand u/s 11A - Denial of CENVAT Credit - Held that - At the time of obtaining registration HBSA Pvt. Ltd. had submitted a ground lay out plan, which was approved by the Superintendent, Customs and Central Excise, Range-6, Division-III, Ghaziabad on 21-8-1998 and in which the engine assembly on ground flour in the premises of Majestic Auto Limited was clearly demarcated. The plant and machinery was installed and was never removed from the premises. The I.C. Engines manufactured by HBSA Pvt. Ltd. in the same premises were used by the appellant. Once it was admitted that the capital goods, on which Modvat Credit was taken by the appellant remained installed in the same premises, which was leased out and continued to be engaged in the manufacture of I.C. Engine, which was further used in the manufacture of two wheelers and that a separate registration certificate was obtained by HBSA Pvt. Ltd., there was no removal of goods. The capital goods remained installed in the same premises and thus even if the premises were transferred on lease, the capital goods even if they were deemed to be installed in the premises of HBSA Pvt. Ltd., Rule 57-S, would not be attracted. Since a separate registration certificate was obtained by which the ground plan was approved by the Central Excise Department, there was no case made out for attracting Section 11A of the Act as there was no intention to evade the payment of duty nor HBSA Pvt. Ltd. could be made liable for penal action under the provisions of Rule 209A of the Central Excise Rules. - Decided in favour of assessee.
Issues Involved:
1. Whether the Tribunal erred in finding removal of capital goods despite their continued installation. 2. Whether physical removal is necessary for 'removal' under Modvat Rules. 3. Whether the extended period under Section 11A of the Act was correctly invoked. 4. Whether the demand of duty ignored precedent set by Pushpaman Forgings. 5. Whether the imposition of penalty was correct. 6. Whether the order confirming demand of interest was correct. Detailed Analysis: 1. Error in Finding Removal of Capital Goods: The appellant argued that the capital goods remained installed at their original position within the factory premises leased to HBSA Pvt. Ltd., and thus, there was no 'removal' as concluded by the Tribunal. The Tribunal, however, held that since the premises were leased, the capital goods were effectively removed from the factory of the appellant and used in another manufacturer's factory, thus necessitating compliance with Rule 57-S. 2. Necessity of Physical Removal for 'Removal' under Modvat Rules: The appellant contended that the capital goods were not physically removed but continued to be used in the same factory premises, although leased. The Tribunal countered that leasing out the premises constituted removal under Rule 57-S, which requires intimation to the Assistant Commissioner and payment of appropriate duty. 3. Invocation of Extended Period Under Section 11A: The appellant argued that Section 11A was not applicable to Modvat Rules on the date in question (25-8-1998) and that the demand should be under Rule 57-S. The Tribunal upheld the demand under Section 11A, citing suppression of facts and non-compliance with Rule 57-S. 4. Ignoring Precedent Set by Pushpaman Forgings: The appellant cited several precedents where similar circumstances did not attract duty or penalty. The Tribunal distinguished these cases, emphasizing the specific facts and the legal separation of the appellant and HBSA Pvt. Ltd. as distinct entities requiring compliance with Rule 57-S. 5. Imposition of Penalty: The appellant argued against the penalty, citing lack of intent to evade duty and that the department was aware of the premises' layout and usage. The Tribunal imposed a penalty, finding non-compliance with Rule 57-S and suppression of facts. 6. Confirmation of Demand of Interest: The Tribunal confirmed the demand of interest, aligning with its finding of non-compliance and removal of capital goods. Conclusion: The High Court found merit in the appellant's contentions, particularly noting that the capital goods remained installed in the same premises, merely leased out, and continued to be used in the manufacture of IC Engines. The Court highlighted that the approved ground plan and separate registration certificate for HBSA Pvt. Ltd. indicated no removal of goods. Consequently, Rule 57-S was not applicable, and there was no basis for invoking Section 11A or imposing penalties. The appeal was allowed, and the orders of the Commissioner and Tribunal were set aside, including the demands for excise duty and penalties. The department was directed to refund the appellant in accordance with the law.
|
