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TMI Blog2017 (5) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... 110 are engaged in the manufacture of Sugar Confectionary Classifiable under 1704.90 of CETA, 1985. On scrutiny of the quarterly return filed for quarter ending December 2002, it was observed that the assessee had cleared certain capital goods during the month of October, 2002 and December, 2002 valued at Rs. 6,73,940/- and Rs. 6,05,770/- respectively without payment of any Central Excise Duty or without reversing the Cenvat Credit / Modvat Credit availed on these Capital Goods at the time of receipt in the factory. It appeared that the assessee had not reversed anytime in the past the Modvat Credit / Cenvat Credit taken on these capital goods either under erstwhile Central Excise Rules, 1944 or Cenvat Credit Rules, 2001/2002. The said capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t equal to the duty of Central Excise leviable on such goods on date of their removal. 3. A show cause notice demanding Rs. 2,04,674/- was issued to the appellants along with proposal for penalty under Cenvat Credit Rules, 2002. The Adjudicating Authority confirmed the demand along with interest and imposed penalty of Rs. 10,000/-. The party went in appeal. The Commissioner (Appeals) upheld the order of the Adjudicating Authority, aggrieved from which the appellants are before this Tribunal. 4. Ld. Advocate for the appellants argues that the duty should have been demanded by the Revenue from M/s Unique Alliance Industries at the time of the sale of the capital goods. He referred to four invoices, Sr. No.27 to 30 and stated that no credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wnership of said capital goods was subsequently vested with M/s Kamko Food Products, it is alleged that the provisions of Cenvat Credit Rules were applicable on these goods and the appellants were required to pay an amount equal to the duty of central excise as required under Rule 3(4) of Cenvat Credit Rules, 2002. 7.2 We find that the Cenvat Credit of duty paid on capital goods was taken by M/s Unique Alliance Industries. The same was utilized by M/s Unique Alliance Industries for payment of duty on their clearances of final products. By virtue of sale agreement dated 16.11.2000 with M/s Kamko Food Products, the ownership of these capital goods was transferred to the appellants. Records show that there was sale of capital goods by M/s Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval shall be made under the cover of an invoice referred to in Rule 7." 11. The liability to pay duty on capital goods arises after the capital goods have been removed as such. The word "as such" is being the subject matter of interpretation by the various Courts. Punjab and Haryana High Court in the case of Commissioner of Central Excise, Ludhiana v. Khalsa Cotspin (P) Ltd., reported in 2011 (270) E.L.T. 349 (P & H) has held as under : "The assessee having validly availed cenvat credit, same is required to be reversed only if goods were cleared in the same position without payment of excise duty. In the present case, it has been held by the Tribunal that goods were not cleared in the same position but after having been used and in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital goods. They were sold as used capital goods." 14. Therefore, it is clear, till the law was amended as on 13-11-2007 in respect of used capital goods, there was no liability to pay duty. In fact, this is evident from the fact that in Cenvat Credit Rules, 2004, the proviso was added making the position clear which was not there in the earlier orders. The proviso reads thus : "if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output service shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by 2.5 per cent for each quarter of a year or part thereof from the date of taking the Cenvat Credit." Therefore, the provisions of Rule 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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