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TMI Blog2016 (6) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Pvt. Ltd., (RCIPL). Consequent upon such a sale and transfer of Chain Division, a dispute arose regarding payment of Cenvat credit availed on inputs available, goods-in-process, finished products and capital goods which were part of Chain Division. Proceedings were initiated against appellant to recover such Cenvat credit attributable to the above items on the ground that the appellant is liable to reverse the credit on these goods (inputs, intermediate goods, final products and capital goods) as they are no longer in their ownership and control and as such on sale and transfer of Chain Division to a new legal entity, these items are deemed to have been cleared attracting the provisions of Rule 3 (5) of Cenvat Credit Rules, 2004. 2. The proceedings concluded vide the impugned order, wherein, learned Commissioner held that the appellant is liable to pay Rs. 1,33,25,607/- on finished excisable goods; Rs. 91,76,449/- towards credit on inputs removed as such; Rs. 31,17,33,687/- towards Cenvat credit on capital goods cleared to the new legal entity; and Rs. 5,36,685/- on LPG transferred, to M/s. RCIPL. The original authority also imposed penalty equivalent to the confirmed amount a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within normal time, though invoking suppression etc. The learned counsel submitted that there is no case for imposing any penalty, least of all, equal penalty in facts and circumstances of the case. If at all, it could be a question of interpretation, even if they have to reverse the credit, the new entity will be readily entitled for all these credits. There has been no removal or diversion of any of these products and there is no allegation to that effect also. The learned counsel relies on Supreme Court decision in the case of International Auto Ltd. Vs Commissioner of Central Excise, Bihar reported in 2005 (183) E.L.T.239 (S.C.) and CESTAT decision in the case of M/s. Jayashree Packaging Vs Commissioner of Central Excise, Chennai-I reported in 2016-TIOL-970-CESTAT-MAD. 4. Learned Authorised Representative contested the submissions of the appellant by stating that the terms of the agreement and the various documents connected to the transfer and sale of assets to the new entity will clearly show that the appellant is no more having any control of the Chain Division and hence they cannot claim any benefit of credit on those items which are effectively transferred to new entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been acknowledged by the original authority also. M/s. RCIPL vide their letter dated 20.07.2010 have stated that they have taken inventory of all items including work-in-progress and finished goods in their books of accounts as on 01.10.2008 and have paid appropriate duty on such goods. The said declaration of M/s. RCIPL has been supported by certificate dated 17.07.2010 of Chartered Accountants to the effect that the finished goods cleared from the factory of M/s. RCIPL have suffered applicable excise duty. We notice that this factual position as asserted by the appellant have not been rebutted by the original authority in any finding. Though, excise liability arises immediately on manufacture it is only on removal of goods the duty is to be discharged. We find that the duty on finished excisable goods is liable to be paid upon clearance and in this case, there is no physical clearance of excisable goods by the appellant. On creation of new joint venture company, the duty liability on clearance of these goods has admittedly been discharged by that company. Hence, we find the demand on appellant amounting to Rs. 1,33,25,607/- cannot be sustained. 9. The next issue is regarding amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion. We find the central point to be considered for application of the above mentioned rule is whether or not the inputs or capital goods on which Cenvat credit has been taken are removed as such from the factory of the appellant. The Hon'ble Supreme Court in the case of J.K. Spinning and Weaving Mills Ltd., & Anr.(supra) examined the scope of term removal. It was held that there can be no doubt that the word removal contemplates shifting of a thing from one place to another. In other words, it contemplates physical movement of goods from one place to another. The Tribunal in Dalmia Cements (Bharat) Ltd. Vs Commissioner of Central Excise, Tiruchirapalli reported in 2008 (224)E.L.T.484 (Tri.-Chennai) following the ratio of the Hon'ble Supreme Court in the above decision examined the scope of application of Rule 3 (5) of Cenvat Credit Rules, 2004. The Tribunal observed as follows:- "9. We also find that one of the decisions cited by ld. Consultant for the Revenue, indeed, supports the assessee's case and the same is the Apex Courts decision in J.K Spinning and Weaving Mills case (supra). In that case, their lordships had examined, inter alia, the meaning of "place of removal" def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The above is the view succinctly expressed by the Allahabad High Court in Hero Motors case (supra). This Court is in agreement with the view expressed by the Allahabad High Court in the above-cited decision and the above decision is squarely applicable to the facts of the present case. In view of the above, the interpretation with regard to Rule 3(5) of CCR, 2004, as made by the Tribunal in the present case is fully justified and it calls for no interference at the hands of this Court." 10. In view of the above settled decision, we find that the provisions of Rule 3 (5) are not attracted in the present case. The original authoritys attempt to distinguish the above findings is not appropriate. He found that these decisions are regarding change of ownership of whole factory whereas here only a part of the factory is transferred. We find such finding as untenable. Further, regarding question of issue of invoice by the appellant for sale and transfer of capital goods and inputs to the new legal entity, we find on perusal of sample invoice that these are not invoices in terms of Rule 11 of Central Excise Rules, 2002. The appellant contended that the goods were identified with value ..... X X X X Extracts X X X X X X X X Extracts X X X X
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