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TMI Blog2022 (6) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... uts and capital goods under CENVAT Credit Rules, 2004. Later, with a view to sharing of passive infrastructure among mobile operators and by way of a scheme of arrangement duly approved by the Hon'ble High Court of Madras on 19.11.2019, VCL demerged its Passive Infrastructure Assets (herein after referred to as PIA) to a new and separate legal entity M/s. Vodafone Essar Infrastructure Ltd. They did not reverse the credit availed by them. The department was of the view that the appellant has to reverse the credit availed by them on capital goods in terms of Rule 3(5) / Rule 3(5A) of CENVAT Credit Rules, 2004. Show Cause Notice was issued proposing to recover the ineligible credit along with interest and also for imposing penalties. After due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises of the provider of output service for providing the output service" 4. She submitted that the words used in the above provision is that credit has to be reversed when the capital goods are removed from the factory. In the present case, there is no such physical removal of the capital goods. Further, the capital goods are continued to be used by the appellant company for their output services. She submitted that the first proviso to Rule 3(5) states that such reversal is not required when inputs or capital goods are removed outside the premises for the purpose of providing the output services. The learned counsel argued that it is an undisputed fact that the appellant continues to use the capital goods for rendering their output ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... careful consideration of the submissions made by both sides, I find that the issue to be decided by me is, whether the appellant is required to reverse the Cenvat credit on transfer of capital goods to their sister unit, in terms of Rule 3(5) of Cenvat Credit Rules, 2004 or not? The ld. Counsel for the appellant relied on various judicial pronouncements. Therefore, the issue is to be decided whether in terms of Rule 3(5) of Cenvat Credit Rules, 2004 the capital goods are required to be physically removed or mere transfer can be said that goods have been removed. The said issue has been examined by the Hon'ble Apex Court in the case of J.K. Spinning and Weaving Mills Limited vs. UOI - 1987 (32) ELT 234 (SC)=2002-TIOL-559-SC-CX-LB wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are required to be physically removed, in Cenvat Credit Rules or in Central Excise Act, nowhere removalhas been defined. Therefore, the verdict of Hon'ble Apex Court is binding on me. Moreover, the decision of Associated Cement Co. Limited (supra) was examined by this Tribunal in the case of Bhilai Steel Plant (supra) wherein this Tribunal observed as under:- Jam, Id. Advocate for the respondent. " 10. Ld. A. R. submits that in terms of Rule 3(4) of the Cenvat Credit Rules, the payment of an untequivlent to the credit availed on capital goods is required to be made inasmuch as the power plant stands sold to M/s BESCL even though there is no physical removal of goods even after sale. He argued that the transaction was nothing short of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." In the Tribunal decision in the case of L.G. Balakrishnan and Bros. Limited (supra), the Tribunal has examined a similar question as is before us and 5 ST/60534/2017-Cu (DB) considered the meaning of the word 'removal' as explained by the Hon'ble Supreme Court and held as under: "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 factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar credit availed on inputs or capital goods or usage of these goods for other than approved purposes." 13. We also note that the Tribunal has taken similar view in all the cases cited by the respondent. The Tribunal decision cited in the case of Steel Authority of India Limited - 2007 (219) ELT 960 (Tri-Del.) - 2007-VIL-60-CESTAT-DEL-CE=2007-TIOL-438-CESTAT-DEL has dealt with identical facts pertaining to another unit of respondent at Rourkela. We also note that the respondent has cited similar decision from the Hon'ble Allahabad High Court as well as Madras High Court." Further, I find that after the decision of Associated Cement Co. Limited, the Honble Karnataka High Court itself has examined the issue again in the case of Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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