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TMI Blog2012 (8) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Despite there being specific admission of the fact of the capital goods in question continued to be installed in their original position in a part of the Appellant Company, whether the Hon'ble Appellate Tribunal have committed an error in arriving at the finding of removal; 2. Whether the Hon'ble Tribunal was wrong in not following the settled law that for 'removal' as envisaged in the Modvat Rules for demand of duty, there has to be physical removal of the capital goods as provided under Rules 9 and 49 of Central Excise Rules? 3. Whether the Hon'ble Tribunal have committed a manifest error in upholding the demand of duty by invoking the extended period under Section 11A of the Act by ignoring the law laid down by the Hon'ble Supreme Court in the case of CCE, Jaipur v. Raghuvar India Ltd. - 2000 (118) E.L.T. 311? 4. Whether the demand of duty as upheld by the Hon'ble Appellate Tribunal by ignoring the law laid down in the case of Pushpaman Forgings, is correct? 5. Whether the imposition of penalty was correct in view of the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of the appellant-company and was shown accordingly in the lay out plan filed by HBSA Pvt. Ltd. for obtaining registration under the Central Excise Rules. The plan forms part of the registration certificate granted to the HBSA Pvt. Ltd. The appellant-company claimed depreciation as per Income Tax Act upto the material time, and even thereafter as per Income Tax Rules. 8. An inspection of the factory premises of the appellant-company and that HBSA Pvt. Ltd. was carried out on 10-1-2001 by the preventive team of the Central Excise Officers. A show cause notice, dated 25-10-2002 was issued alleging that the Modvat credit availed by M/s. Majestic Auto Limited on the capital goods transferred to HBSA Pvt. Ltd. was not reversed by M/s. Majestic Auto Limited and therefore, Majestic Auto Limited has to pay excise duty on such machinery and fixtures on 25-8-1998 in terms of Rule 57-S(b) of the Central Excise Rules, 1944, as the same were being used in the manufacture of IC Engines by M/s. Majestic Auto Limited, after calculating deductions of 2.5% of credit taken for each quarter of a year of use or erection thereof worked out to Rs. 25,08,877/- recoverable from M/s. Majestic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the capital goods are installed has now been leased to the Appellants No. 2 who are now in possession of the said premises, it cannot be claimed by the Appellants No. 1 that the capital goods are used in their factory. The capital goods are no more installed in the factory of the Appellant No. 1 and as these are now in the factory premises of another manufacturer (i.e Appellant No. 2), the same have been removed from the factory for home consumption. In terms of provisions of clause (ii) of sub-Rule (1) of Rule 57-S, the same should have been removed - (a) after intimating the Assistant Commissioner of Central Excise having jurisdiction over the factory; (b) after obtaining dated acknowledgement of the same; and (c) on payment of appropriate duty of excise leviable thereon as if such capital goods have been manufactured in their factory. Thus the Appellant No. 1 is liable to pay the duty on the impugned capital goods. A penalty is also imposable on them as they have not complied with the conditions specified in Rule 57-S for the utilization of the capital goods." 10. Shri Bharat Ji Agarwal, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p;Shri Bharat Ji Agarwal has in support of his submissions relied upon the judgment of CEGAT, Northern Bench, New Delhi in Jamna Auto Industries Limited v. Commissioner of Central Excise, Indore - 2001 (130) E.L.T. 181 (Tri-Del); Whirpool of India Ltd. v. CC, New Delhi - 2003 (58) RLT 241 (CESTAT-Del); Metzeller Automotive Profiles India P. Ltd. v. C.C.E., Ghaziabad - 2004 (167) E.L.T. 208 (Tri-Del); and Tata Motors Pvt. Ltd. v. Commissioner of Central Excise, Jamshedpur - 2005 (190) E.L.T. 269 (Tri-Mumbai). 14. Shri Bharat Ji Agarwal submits that the penalty is not imposable if the extended period of limitation is not available to the department and has relied upon a judgment of Supreme Court in Pahwa Chemicals Private Limited v. Commissioner of C. Ex., Delhi - 2005 (189) E.L.T. 257 (S.C.). 15. Shri B.K.S. Raghuvansi, appearing for the department has referred to the reasons given in the appellate order and the order passed by the Tribunal. He submits that on an inspection, it was found that excisable capital goods on which Modvat credit was taken, were being used by HBSA Pvt. Ltd. Every premise used in the manufacture of excisable goods, which is also defined as a fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the goods were removed without intimation, which were so found on an inspection, the machinery provisions of Section 11A of the Excise Act are applicable. 18. In Jamna Auto Industries Ltd. v. Commissioner of Central Excise, Indore (supra) the Tribunal had found that the removal is covered by Rules 9 and 49. Sub-rule (2) and sub-rule (21) are self contained code covering both transfer of credits and transfer of inputs. Sub-rule (20) covers the transfer of the credit lying in the books of the seller and sub-rule (21) covers the transfer of inputs lying in a stock with the seller on the date of sale. The capital goods are covered by Rule 57-S(5) and the credit on capital goods is covered by sub-rule (6). In view of the specific provisions covering the change in the ownership of the factory, the general provisions of Rule 57-F(2) are not applicable. The demand of duty was set aside and on the question of imposition of penalty it was found that the necessary verification was conducted by the department, which was aware inasmuch the de-registration of one unit and its registration into two units was allowed by the departmental officers. The excise duty, and penalty were not fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellants No. 1 herein is not liable to pay any duty and consequently no penalty is imposable on either of the Appellants. We therefore allow both the Appeals." 21. In Tata Motors Pvt. Ltd. v. Commissioner of Central Excise, Jamshedpur (supra) following the Jamna Auto, Metzeller Automotive Profiles India Pvt. Ltd, and Whirlpool of India Ltd, CESTAT Bombay held that the inputs, in work in progress, and finished goods were finally routed only to M/s. Telco where they were used in the assembly of motor vehicles. Such removals of M/s. Telco inputs to the new unit i.e. hived out Axle & Transmission Assembly unit, on job work without reversal of credit & receipt back by M/s. Telco, was the prescribed permitted feature of Modvat Rules. There was no reason to demand duty, equivalent to the credit, on such inputs. The Axle & Transmission Assembly cleared/transferred to M/s. Telco for use in motor vehicle, axle assembly only after payment of duty under the procedures in Rule 57F(3) or (4). The revenue's interest was safeguarded. 22. In the present case we find substance in the contention of Shri Bharat Ji Agarwal that at the time of obtaining registration HBSA Pvt. Ltd. had subm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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