9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (3) TMI 87 - AT - Central ExciseReversal of CENVAT credit based on depreciated value - capital goods used for some time and thereafter removed - Revenue was of the view that the appellant should have reversed the entire credit as during the period when the goods were removed from the factory there was no provision in Rule 3 of the CENVAT Credit Rules for reversal of credit based on depreciated value - Held that - As deccided in CCE, Salem Vs. Rogini Mills Ltd. 2010 (10) TMI 424 - MADRAS HIGH COURT the said provision requiring reversal of the entire credit taken at the time of receipt of the capital goods in the factory cannot be applied to a situation where capital goods are cleared after use for a few years. when the transfer of the capital goods is from one factory of the same assessee to another factory of the same assessee there is no need for reversal of any credit - in favour of assessee.
Issues:
1. Reversal of CENVAT credit on capital goods transferred between factories. 2. Applicability of Rule 3(4)(c) of the CENVAT Credit Rules, 2004. 3. Interpretation of the expression "as such" in Rule 3(4)(c). 4. Precedents set by High Courts regarding reversal of credit on transferred capital goods. 5. Revenue's argument based on Rule 3(5)(c) and the decision of the Larger Bench of the Tribunal. 6. Hierarchy of Courts in decision-making. Analysis: The case involved a dispute regarding the reversal of CENVAT credit on capital goods that were transferred between factories. The appellants had initially taken credit on these goods in 2000 and later transferred them to another factory in 2005, reversing the credit based on the depreciated value at that time. The Revenue contended that the entire credit should have been reversed at the time of receipt in the first factory, as there was no provision for reversal based on depreciated value at the time of removal. The appellant relied on the decisions of the Hon'ble High Courts to support their argument. They cited the Madras High Court's ruling in CCE, Salem Vs. Rogini Mills Ltd., which held that the provision requiring reversal of the entire credit at the time of receipt does not apply when capital goods are transferred after being used for some time. The appellant also referred to the Punjab & Haryana High Court's decision in Khalsa Cotspin (P) Ltd. Vs., which stated that no reversal of credit is needed when capital goods are transferred between factories of the same assessee. On the other hand, the Revenue argued that Rule 3(5)(c) of the CENVAT Credit Rules, 2004 was the applicable provision during the relevant time, as there was no provision for reversal based on transaction value or depreciated value. The Revenue also highlighted the decision of the Larger Bench of the Tribunal in Modernova Plastyles Pvt. Ltd. Vs. Commissioner, which supported their stance. After considering both sides, the judge, following the hierarchy of Courts, gave precedence to the decisions of the High Courts over the Larger Bench of the Tribunal. The judge found merit in the appellant's arguments based on the High Court rulings and concluded that the impugned order could not be sustained. Consequently, the impugned order was set aside, and the appeal was allowed, leading to the disposal of the stay application as well.
|
