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TMI Blog2009 (4) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be logical to insist on reversal of Cenvat credit depending upon the extent of use, which would be more or less the duty chargeable on the depreciated value of the used capital goods. If the Department’s view is accepted, it would lead to absurd results as even when the cenvated capital goods are cleared after long years of use at a small practice of their original value, still full Cenvat credit originally taken would be required to be reversed which would defeat the very purpose of grant of Cenvat credit facility in respect of capital goods. - I do not find any merit in the Revenue’s appeal. - E/3891/2005-SM(BR) - 393/2009-SM(BR)(PB), - Dated:- 23-4-2009 - Shri Rakesh Kumar, Member (T) REPRESENTED BY : Shri S.K. Bhaskar, DR, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d imposed penalty of equal amount on the respondent under Rule 13 of Cenvat Credit Rules, 2002. On appeal, Commissioner (Appeals) vide impugned order set aside the Dy. Commissioner's order on the ground that as per the Board's circular No. 643/34/2002-CX., dated 1-7-02 when the capital goods on which Cenvat credit has been taken, are removed as such on sale, the duty payable would be on the value after permitting the depreciation, as per the rates fixed in the Board's letter No. 495/16/1993-Cus.VI, dated 26-5-93. It is against this order that this appeal has been filed by the Revenue. Initially, this appeal had been allowed by the Tribunal vide Final Order No. 1781/07-SM, dated 20-11-07 [2008 (224) E.L.T. 595 (Tribunal)]. This order had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of Cenvat Credit Rules, 2002 means that capital goods removed without putting them to use and that when the capital goods are removed after use for a period of 7 to 8 years, they cannot be said to have been removed as such and that the interpretation given by the authorities below would lead to absurd results if an assessee is required to deposit entire Cenvat credit taken at the time of receipt of the capital goods, when the said capital goods are subsequently removed as old, damaged and unserviceable capital goods. She also pointed out that the Tribunal's judgment in the case of Cummins India Ltd. v. CCE, Pune-III has been upheld by the Hon'ble Bombay High Court vide judgment reported in 2009 (234) E.L.T. A120. In view of the above, sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt equal to the duty at the rate prevailing on the date of clearance and on value determined under the provisions of Section 4 of the Central Excise Act and in case of removal of used capital goods, as per the Board's circular No. 643/34/02-CX., dated 1-7-02, depreciation as per the rates fixed in the Board's letter No. 495/16/93-Cus.VI dated 26-5-93 was to be allowed. They took care of the situation like the one in this case where cenvated capital goods, after some use are cleared, as the Cenvat credit required to be reversed was the duty payable on the depreciated value. With effect from 13-11-07 a proviso was added to Rule 3(5) of Cenvat Credit Rules, 2004 [corresponding to Rule 3(4) of Cenvat Credit Rules, 2002] providing that if the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have not lost their identity as capital goods and since on removal of totally unused capital goods, full Cenvat credit is required to be reversed and on removal of unserviceable capital goods, removal as scrap, no Cenvat credit would be required to be reversed, in case of removal of used capital goods in between unused stage and scrap stage, when the capital goods, though used, have still retained their identity as capital goods, it would be logical to insist on reversal of Cenvat credit depending upon the extent of use, which would be more or less the duty chargeable on the depreciated value of the used capital goods. If the Department's view is accepted, it would lead to absurd results as even when the cenvated capital goods are cle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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