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2014 (12) TMI 31 - AT - Central ExciseCENVAT Credit - inter-unit transfer of capital goods - it is submitted that they have cleared the goods under Rule 4(5)(a) of Rules, 2002 - Held that - the capital goods was sent as such to other unit for production of the goods and therefore the denial of credit is not justified. This view is also supported by the decision of the Tribunal in the case of Pooja Forge Ltd. (2006 (1) TMI 290 - CESTAT, NEW DELHI) as upheld by the Hon ble Punjab & Haryana High Court. In any event, Unit - I already reversed the credit which was appropriated by the adjudicating authority. The learned consultant contended that Unit - II also availed the CENVAT credit. As the learned consultant undertakes not to claim refund, the demand of duty is upheld. However, no reason for confiscation and imposition of penalty and demand of interest - Decided partly in favour of assessee.
Issues:
Inter-unit transfer of capital goods, Confiscation of goods, Penalty imposition, CENVAT credit availed, Rule 4(5)(a) application, Revenue neutrality, Rule 13 of CENVAT Credit Rules, 2002. Inter-unit transfer of capital goods: The case involved two units, Unit I and Unit II, both engaged in manufacturing aluminum components. Unit I availed CENVAT credit on capital goods and cleared them to Unit II without reversing the credit. The central excise officer seized the goods in Unit II, leading to a show-cause notice proposing confiscation and recovery of an amount. The appellants argued that it was an inter-unit transfer for the same final product, citing relevant precedents. The Tribunal analyzed Rule 4(5)(a) and previous judgments to determine the applicability of the rule in this context. Ultimately, the Tribunal found that the denial of credit was not justified, considering the nature of the transfer and the manufacturing process involved. Confiscation of goods and Penalty imposition: The original authority had confiscated the seized goods provisionally released earlier and imposed fines and penalties on both units. The appellants contested the confiscation and penalties, arguing that Unit II was only a recipient of the goods and had no involvement. The Tribunal considered Rule 13 of the CENVAT Credit Rules, 2002, which applies to the wrong availment of credit. It was noted that Unit I had taken credit correctly, and therefore, the confiscation and penalties were deemed unsustainable. The Tribunal also highlighted the revenue neutrality aspect and set aside the imposition of fines, penalties, and interest. CENVAT credit availed and Rule 4(5)(a) application: The appellants had availed CENVAT credit on capital goods and argued that Rule 4(5)(a) allowed the removal of capital goods for further processing without the need for credit reversal. They contended that Unit I had already paid the duty, and Unit II had availed credit based on invoices. The Tribunal examined the provisions of Rule 4(5)(a) in conjunction with Rule 4(5)(b) and relevant case law to determine the applicability of the rule in the present scenario. The Tribunal ultimately upheld the demand of duty while setting aside the imposition of fines, penalties, and interest. Rule 13 of CENVAT Credit Rules, 2002: Rule 13 of the CENVAT Credit Rules, 2002, was a focal point in the judgment, as it pertained to the confiscation and penalty imposition for the wrong availment of credit. The Tribunal scrutinized the application of Rule 13 in the context of the case, emphasizing that Unit I had taken credit correctly. This analysis led to the decision that confiscation and penalties were not sustainable under the given circumstances. Revenue neutrality and Precedents: The concept of revenue neutrality was crucial in the judgment, with the Tribunal emphasizing the correct availment of credit by Unit I and the subsequent utilization of credit by Unit II. The Tribunal referenced relevant precedents and legal interpretations to support the decision to set aside fines, penalties, and interest. The Tribunal's analysis focused on ensuring fairness and adherence to the legal framework governing CENVAT credit rules. This detailed analysis of the judgment provides a comprehensive understanding of the issues addressed, the arguments presented by the parties, and the Tribunal's rationale behind the decision.
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