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2015 (10) TMI 141 - AT - Central ExciseRemoval of capital as such - Reversal of CENVAT Credit - Held that - Explanation to Rule 57AB of Central Excise Rules 1944 provides when inputs or capital goods are removed from the factory, the manufacturer of the final product would pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured in the same factory, and such removal shall be made under the cover of an invoice prescribed under Rule 52A of the said Rules. - Provision was changed from time to time. The Larger Bench of the Tribunal in the case of Eicher Tractors (2005 (9) TMI 340 - CESTAT, NEW DELHI) while dealing with the Rule 3(5) of CENVAT Credit Rules on the issue in respect of valuation of inputs on which CENVAT Credit has been availed and removed as such held in favour of the assessee. Rule 3(5) of CENVAT Credit Rules 2004 provides that when inputs or capital goods on which CENVAT Credit has been taken are removed as such from the factory, the manufacturer of the final product shall pay an amount equal to the credit availed in respect of such inputs. - Decided in favour of assessee.
Issues:
- Demand of Central Excise duty on clearance of inputs - Interpretation of Rule 57AB of Central Excise Rules, 2002 - Applicability of CENVAT Credit Rules - Reversal of credit availed on inputs at the time of clearance Analysis: Issue 1: Demand of Central Excise duty on clearance of inputs The case involved the appellants, engaged in the manufacture of Pesticides/Insecticides, facing a demand of Central Excise duty on the clearance of inputs to another company. The Adjudicating Authority confirmed the demand, which was later partially reduced by the Commissioner (Appeals). The appellant argued that they cleared the inputs as such and reversed the credit availed on the inputs, citing various decisions of the Tribunal supporting their stance. Issue 2: Interpretation of Rule 57AB of Central Excise Rules, 2002 The Revenue, represented by the ld.Authorised Representative, relied on Rule 57AB (1)(b) of the Central Excise Rules, 2002, emphasizing the liability of the appellant to pay the appropriate duty of Excise on the inputs cleared as if they were manufactured and removed from the factory. The explanation inserted during the relevant period was highlighted to support this argument. Issue 3: Applicability of CENVAT Credit Rules Upon perusal of the records, the Tribunal analyzed the explanation to Rule 57AB of Central Excise Rules 1944, which mandates the payment of appropriate duty when inputs are removed from the factory. The Tribunal referred to previous decisions, such as the Eicher Tractors case, which favored the assessee regarding the valuation of inputs on which CENVAT Credit had been availed and removed as such. Issue 4: Reversal of credit availed on inputs at the time of clearance The Tribunal, citing the Tata Motors Ltd case, highlighted the sufficiency of reversing the credit availed at the time of receipt of inputs during their clearance from the factory of production. The Tribunal compared Rule 57F of Central Excise Rules with Rule 57AB(b) and found the latter to lack certain conditions present in the former, leading to the conclusion that the reversal of credit at the time of receipt of inputs is adequate at the time of clearance. In conclusion, the Tribunal found the appellant's case to be covered by the decision in Tata Motors Ltd, setting aside the impugned order and allowing the appeal filed by the appellant.
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