2015 (3) TMI 32 - AT - Central Excise

Reversal of Cenvat Credit - Capital goods - Held that - When the capital goods have been put to use and cleared on transaction value, the assessee is required to pay Central Excise duty on transaction value and not required to reverse Cenvat Credit availed on such capital goods. The issue is no more integra in the light of the decision of Cummins India Ltd. (2008 (7) TMI 945 - BOMBAY HIGH COURT). Therefore, I set aside the impugned order holding that the appellant has rightly paid the duty on transaction value. - Decided in favour of assesse.

Summary

Issues:
1. Duty demand confirmed for reversal of Cenvat Credit availed on capital goods cleared after use.

Analysis:
The appellant appealed against an order confirming duty demand for reversing Cenvat Credit on capital goods cleared post-use. The appellant, a medicament manufacturer, procured capital goods and availed Cenvat credit based on the supplier's invoice. Subsequently, the goods were put into use and sold at a transaction value, with duty paid on the same. The revenue contended that the goods were removed as is, necessitating the reversal of Cenvat Credit equivalent to the amount availed. The appellant challenged this demand, leading to the impugned order.

The Tribunal referred to a similar issue addressed by the Hon'ble High Court in the case of Cummins India Ltd. The High Court held that when capital goods are utilized and cleared at a transaction value, the assessee must pay Central Excise duty based on the transaction value without reversing the Cenvat Credit initially availed on such goods. Citing the precedent, the Tribunal set aside the impugned order, affirming that the appellant correctly paid duty on the transaction value. Consequently, the appeal was allowed, with any necessary consequential relief granted.

This judgment clarifies the treatment of Cenvat Credit on capital goods cleared after use, aligning with the Cummins India Ltd. decision and emphasizing the duty payment based on transaction value without requiring the reversal of Cenvat Credit. The Tribunal's decision provides a clear directive for similar cases involving the availing of Cenvat Credit on capital goods subsequently sold after use, ensuring consistency in excise duty obligations and credit utilization practices in such scenarios.