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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 ..... pital goods even if they were deemed to be installed in the premises of HBSA Pvt. Ltd., Rule 57-S, would not be attracted. Since a separate registration certificate was obtained by which the ground plan was approved by the Central Excise Department, there was no case made out for attracting Section 11A of the Act as there was no intention to evade the payment of duty nor HBSA Pvt. Ltd. could be made liable for penal action under the provisions of Rule 209A of the Central Excise Rules. - Decided in favour of assessee. - Central Excise Appeal No. 13 of 2005 - - - Dated:- 30-8-2012 - Sunil Ambwani and Aditya Nath Mittal, JJ. Shri Bharat Ji Agarwal and Rishi Raj Kapoor, for the Appellant. Shri K.C. Sinha, S.P. Kesarwani and B.K.S. Raghuvansi, S.S.C., for the Respondent. JUDGMENT We have heard Shri Bharat Ji Agarwal, Senior Advocate assisted by Shri R.R. Kapoor, learned counsel appearing for the appellant. Shri B.K.S. Raghuvansi appears for the department. 2. In this Central Excise Appeal under Section 35G of the Central Excise Act, 1944, arising out of the judgement of Customs, Excise Service Tax Appellate Tribunal, dated 24-6-2004 in Appeal No. E/3352-335 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accessories of two wheeled motor vehicles. One of these parts is I.C. Engine (Internal Combustion Engines). The IC Engines were manufactured by the company at its factory at Ghaziabad. 5. On 25-8-1998, the manufacture of IC Engines was diverted to M/s. Hero Briggs Stratton Auto Pvt. Ltd., established by Hero Group of Companies and for that purpose the appellant-company gave on lease a part of their factory premises to Hero Briggs Stratton Auto Pvt. Ltd. (HBSA Pvt. Ltd.). The HBSA Pvt. Ltd. obtained registration under Central Excise Rules for manufacture of parts and accessories of motor vehicles and undertook manufacture of IC Engines for Hero Motors Ltd. - the appellant-company on job work basis under Notification No. 214/86, dated 10-3-1986. A part of their production was for sale to other buyers. 6. The appellant-company purchased various plants and machineries for manufacture of IC Engines. Some of the plants and machineries were sold by the appellant-company to HBSA Pvt. Ltd. In addition to these, the plant and machineries, which were used for manufacture of IC Engines continued to be owned by the appellant-company, and remained installed at the very same places/po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in dispute that the Appellant No. 1 have taken the MODVAT Credit of the duty paid on the capital goods in question and the premises in which the said goods are installed had been given on lease to the Appellant No. 2. This is also very clear from the Lease Agreement that the Lessee i.e. Appellants No. 2 shall enjoy the Demised Premises during the lease period without interruption by the lessor (i.e. Appellant No. 1). In terms of the Lease Agreement, the Appellants No. 2 enjoy the said premises and therefore, it cannot be claimed to be the part of factory premises of the Appellants No. 1. 6.2 Rule 57-Q of the Central Excise Rules empower a manufacturer to take the credit of the duty paid on the capital goods used in the factory of the manufacturer of final products. Rule 57-S deals with the manner of utilization of the capital goods. As per sub-Rule (1) of Rule 57-S, the capital goods may be (i) used in the factory of the manufacturer of the final produces; or (ii) removed, after intimating the Assistant Commissioner of Central Excise having jurisdiction over the factory and after obtaining dated acknowledgement of the same, from the factory for home consumption or for expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital goods were neither leased nor given on loan. The appellant continues to own these goods, and continues to avail the depreciation under the Income Tax Act. The machines continue to be used in the manufacture of IC Engines which in turn are used for manufacture of motor vehicles, which was the case even prior to leasing out of the portion of the factory to HBSA Pvt. Ltd. 12. Shri Bharat Ji Agarwal further submits that findings of suppression ignores the documents on record inasmuch as the lay out plan shows that the premises leased out to HBSA Pvt. Ltd. and the installation of capital goods therein was in existence and was well within the knowledge of the department. The Superintendent, Central Excise had approved the ground plan. The penalty, therefore, is not imposable under Section 11A of the Central Excise Act. As a newly established unit HBSA Pvt. Ltd. had no knowledge of the Rules providing payment of duty in case of removal of the used capital goods. The capital goods (machinery) installed at the same place was neither transferred nor sold nor there was any reason to believe that the goods was liable for confiscation. The findings of connivance was also entirely misp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the Assistant Commissioner of Central Excise having jurisdiction over the factory, and after obtaining dated acknowledgement of the same, from the factory for home consumption or for export on payment appropriate duty of excise leviable thereon or for manufacture in the factory. Sub-rule (ii) of Rule 1 of Rule 57-S provides that the goods 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. 17. It is submitted by Shri Raghuvansi that under the lease agreement the demised premises with plant and machinery was given to HBSA Pvt. Ltd. The capital goods are no more installed in the factory of the appellant. These are now in the factory premises of HBSA Pvt. Ltd. and thus the same have been removed from the factory for home consumption without any intimation of Excise Commissioner of Central Excise after obtaining dated acknowledgement and on payment of appropriate duty of excise leviable thereon. The appellant is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge in ownership does not amount to removal of the inputs and capital goods. He held in paragraph 4 as follows :- 4. We have considered the submissions of both the sides. The facts which are not in dispute are that the Appellant No. 1 has sold one of its division - Anti Vibration System Division with all capital goods and inputs to Appellant No. 2 who are manufacturing Anti Vibration System in the same premises in which earlier Appellant No. 1 used to manufacture those goods. The admitted fact is that neither the inputs nor the capital goods have been removed from the factory premises. The provisions of Explanation to sub-rule 1(b) of Rule 57AB is applicable only in those cases when inputs or capital goods are removed from the factory. The deemed provisions of removal, as contained in Rules 9 and 49 of the Central Excise Rules, will not be applicable in the present matter for the simple reason that there is no removal of the goods but sale of the entire division with all its machines, machinery, raw material, finished goods etc. The Appellate Tribunal has considered the similar issue in both the decisions relied upon by the learned Advocate, and has held that the Appellants wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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