2015 (3) TMI 694 - HC - Central Excise

Denial of CENVAT Credit - Capital goods - Removal of capital goods as such - Whether the Honourable CESTAT was correct in holding that Capital Goods removed as such would mean without putting the machinery to any use - Held that - Following decision of Commissioner of Central Excise, Salem Vs M/s.Rogini Mills Ltd. 2010 (10) TMI 424 - MADRAS HIGH COURT - Decided against Revenue.

Summary

Issues:
Interpretation of the term 'Capital Goods removed as such' under CENVAT Credit Rules, 2004.

Analysis:

1. The case involved a dispute regarding the interpretation of the term 'Capital Goods removed as such' under the CENVAT Credit Rules, 2004. The appellant, the Revenue, challenged the Tribunal's decision allowing the assessee to clear a 'speed frame lapping machine' after using it for 8 years without reversing the credit taken initially. The Deputy Commissioner issued a show cause notice for the differential amount of credit availed. The Commissioner (Appeals) ruled in favor of the Revenue, but the Tribunal sided with the assessee, citing the Madura Coats case precedent.

2. The Tribunal held that the appellants were not required to reverse any credit since they removed 'used capital goods' after putting them to use for 8 years. The requirement to reverse credit only applied if the capital goods were removed 'as such,' meaning without utilizing the machinery. The Tribunal set aside the order demanding the differential credit, interest, and penalty, ruling in favor of the assessee.

3. The High Court referred to a similar case, Commissioner of Central Excise, Salem Vs M/s.Rogini Mills Ltd., where the Court upheld the Tribunal's decision on the interpretation of 'as such' under the CENVAT Credit Rules. The Court noted that the issue in the present case was covered by the Rogini Mills case, where the Court addressed questions regarding the reversal of credit for used capital goods removed from the factory.

4. The High Court concurred with the legal position established in the Rogini Mills case and ruled in favor of the assessee, dismissing the appeal by the Revenue. The Court emphasized that the term 'as such' did not apply to used capital goods removed after being put to use, aligning with the Tribunal's interpretation. As a result, the appeal was dismissed, and no costs were awarded in the case.