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TMI Blog2024 (7) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery sold was capital goods and the provisions of Rule 3(5A)(b) clearly provides that if the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on the transaction value - as observed by the Authorities below, the purchase bill and the sale bill, which are annexed along with the appeal here, do not show any correlation between the goods purchased and sold. The sale bill i.e. invoice no.180 dated 09.07.2016 do not provide any description as to the nature of the capital goods being sold. Though the appellant in the appeal has quoted the affidavit filed by Shri P.K. Mehra, Director of the appellant company to say that the said old and used machinery was sold in the year 2016 throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n rightly invoked and the penalty imposed thereon. There are no reason to interfere with the impugned order and the same is hereby affirmed - appeal dismissed. - MS. BINU TAMTA, MEMBER (JUDICIAL) Ms.Priyanka Goel , Advocate for the appellant. Shri Arun Sheoran, Authorised Representative for the respondent. ORDER The order [ Order-n-Appeal No.67(RLM)CE/JPR/2022 dated 19.12.2022/04.01.2023 ] under challenge decided the issue of the leviability of the central excise duty on sale of the old machinery (sold by the appellant) as scrap and eligibility of the cenvat credit of the service tax availed on outward freight under GTA services against the appellant and in favour of the Revenue. 2. The facts of the case are that the appellant being manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f output services. Show cause notice dated 18.05.2017 was issued to the appellant demanding the central excise duty on the old machinery sold as scrap in contravention of the provisions of Rule 3(5A)(b) of CCR and wrongly taken the cenvat credit of service tax by contravening the provisions of Rule 3 of CCR read with Rule 2(l). The Adjudicating Authority confirmed the demand vide order-in-original dated 05.02.2018, which was challenged before the Commissioner (Appeals), who was pleased to remand the matter back for de novo adjudication. Accordingly, fresh order-in-original dated 15.06.2021 was passed once again confirming the demand along with interest and penalty. The matter was re-adjudicated before the Commissioner (Appeals) and by the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the provisions of the Statute. Hence, before considering the issues, it is relevant to reproduce the provisions of Rule 3(5A)(b) as under:- Section 3(5A) in CENVAT Credit Rules, 2004 (5A)[(a) If the capital goods, on which CENVAT credit has been taken, are removed after being used, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CENVAT Credit, namely:- (i) for computers and computer peripherals: for each quarter in the first year @ 10% for each quarter in the second year @ 8% for each quarter in the third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t filed by Shri P.K. Mehra, Director of the appellant company to say that the said old and used machinery was sold in the year 2016 through the invoice no.180 dated 09.07.2016. However, neither the affidavit has any date nor does it specifies the period during which Shri P.K. Mehra was working as Director of the appellant company to show his bonafides as to his awareness of the sale and purchase. In any event, the appellant is liable to pay the duty in terms of the statutory provisions of Rule 3(5A)(b). 7. On the second issue of availing the cenvat credit of service tax paid on outward freight and utilizing the same towards the payment of duty, it is necessary to consider the statutory provisions. In this regard Rule 2(l) of CCR defines inp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) second stage dealer means a dealer who purchases the goods from a first stage dealer; (t) words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts. The reading of the definition of input service shows that the outward transportation upto the place of removal only qualifies to be an input service . In the present case, it is an admitted position that the appellant availed the cenvat credit of service tax paid on outward transportation beyond the factory gate . In terms of the aforesaid provisions, the sale at the factory gate is not eligible to avail the cenvat credit of outward transportation and the appellant, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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