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TMI Blog2024 (9) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... l goods. Further Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS VERSUS AUTO IGNITION LTD. [ 2008 (4) TMI 43 - SUPREME COURT ] held that the onus to prove that the Assessee had availed the Modvat credit was on the Revenue. During the period in dispute, Rule 3(5) of CCR, 2004 does not provide any mechanism for recovering the Cenvat credit in case the manufacturer has failed to pay an amount equal to the Cenvat credit as required by the Rules. Where the Rules do not provide for recovery mechanism during the impugned period, demand of the same under any other provision is not sustainable and is accordingly set aside. The impugned order is set aside and the appeal filed by the Appellant is allowed. - MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) Shri Atul Gupta, Advocate Ms. Ushmeet Kaur Monga, Advocate for the Appellant Shri A. K. Choudhary, Authorized Representative for the Respondent ORDER M/s Berger Paints India Limited [Appellant] A-38, Industrial Area, Sikanderabad, Bulandshahar, Uttar Pradesh is having its registered office at Calcutta and head office at New Delhi. The said company had three divisions namely Berger Division, Berger Auto India Coating (BAICL) Division and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these divisions are prepared. The final accounts of the company are prepared by amalgamating the Trial balance of all the divisions. The Appellant at the relevant time period was Rajdoot Division (later changed to British Paints Division w.e.f. 01.04.2009) was registered as a manufacturer at A-38, Industrial Area, Sinkandrabad, Buland Shahar, for manufacture of paints falling under Chapter 32 of the Central Excise Tariff Act, 1985. The Appellant had purchased certain assets which were put to use in the Appellant s premises between 1998-2002. The following assets, after the expiry of their useful life, were sold by the Appellant during the relevant period: Sr. No. Particular of asset Amount in Rs. 1. Electronic Weighbridge 50,000 2. Photocopiers 1,15,000 3. Air conditioners 22,500 4. Fire extinguisher 8,700 Total 1,46,200 Similarly, other divisions of Berger Paints also sold plant and machinery during the relevant period. The same was reflected in the Balance Sheet of the Appellant Company, which was made by combining the accounts of all the three divisions. The detail of the sale made by the Berger Division through the sale office at Noida was also provided in the reply. 5. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on this ratio decided in the following decisions:- a. Commissioner of Customs vs. Auto Ignition Ltd. 2008 (226) E.L.T. 14 (S.C.). b. Hindustan Coca Cola Beverages Pvt. Ltd. vs. C.C.E. S.T., Patna, 2016 (343) E.L.T. 1016 (Tri.-Kolkata). c. Karnal Co-operative Sugar Mills Ltd. vs. Commissioner of C. EX., Panchkula 2011 (265) E.L.T. 236 (Tri. - Del.). d. CCE, Chandigarh vs. Winsome Textile Industries Ltd. reported at 2017 (358) E.L.T. 387 (Tri-Chan). e. Shree Bhageswari Papers Ltd. vs. CCE, Meerut reported at 2016 (338) E.L.T. 132 (Tri-All). f. Chemplast Sanmar Ltd. vs. CCE, Chennai reported at 2010 (262) E.L.T. 1124 (Tri-Mad). Learned Advocate further submitted that no bifurcation has been done by the Department neither in terms of audited combined Balance Sheet which consisted of accounts of three divisions nor in terms whether the sold goods are situated in factory premises or administrative building. The Department has failed to meet its burden of proof and in case of demand, burden of proof is on the Department. The Appellant submitted Chartered Accountant s certificates based on Schedule 15 and Schedule 6. Chartered Accountant s certificate based on Schedule 15 is showin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Department. There was no positive act of suppression. The demand in the present case is pursuant to an audit objection, hence there cannot be any suppression of facts and there cannot be any basis to invoke extended period. The Audit was conducted and completed before December, 2008, i.e., within the normal limitation period. Thus, the raising of the demand by invoking the extended period of limitation is illegal and not sustainable. 8. Learned Departmental Authorized Representative justified the impugned order and submitted that the appeal filed by the Appellant being devoid of any merits may be dismissed. 9. Heard both the sides and perused the appeal records. 10. For better appreciation of the facts Rule 3(5) of the CCR, 2004 is reproduced as under:- (5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9: Provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternational (Khaini) Pvt. Ltd., Kundli (Sonipat) and that they were removed without payment of the appropriate amount and thus there was a violation of the Rules. The goods were accordingly liable to be confiscated under Rule 15. The goods had been seized on 7th April, 2008 and on 26th May, 2008 they were provisionally released on execution of bond equal to the value of the goods and on furnishing bank guarantee of Rs. 20 lacs. After noticing these facts, the CCE recorded the following findings, rejecting the contentions of the appellant to the contrary :- 1. The capital goods were cleared neither as waste or scrap but as used capital goods which did not exhaust their useful life at the time of clearance. 2. The departmental understanding of the relevant rule was that even after use, the identity of the capital goods does not change, and, therefore, they remain as such and, therefore, their clearance will be treated as clearance of capital goods and the assessee would be liable to pay an amount equal to the credit availed in respect of such capital goods. The removal shall also be made under an invoice. 3. The capital goods have been removed without intimating the department. 4. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat credit. It was only from 13-11-2007, when the proviso was added to the Rule, that used capital goods were subjected to a concessional rate of duty, that is, an amount equal to the Cenvat credit taken in respect of the capital goods and reduced by 2.5% for which quarter of the year or part thereof from the date of taking the credit. In this view of the matter, the Tribunal observed as follows :- 10. Plain reading of above provisions of law discloses that at the relevant time, that is, when the capital goods were removed as such from the factory by the appellants, they were required to pay an amount equal to the credit availed by them in respect of such capital goods. Once it is apparent that the appellants had not paid such amounts, there was clear violation of the Rule in force at the relevant time. 9 . As regards the contention that Rule 3(5) as it existed prior to 13-11-2007 did not apply to used capital goods, the Tribunal referred to the Larger Bench decision in the case of Modernova Plasty Pvt. Ltd. v. CCE, Raigad - 2008 (232) E.L.T. 29 and held that in this decision it has been clearly held that the expression as such cannot be restricted to mean only new or unused capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule 9 (underlining ours) 12 . On 13-11-2007 a proviso was added to Rule 3(5) and the same is as follows :- Provided further that 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 :- (a) 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 year @ 5% for each quarter in the fourth and fifth year @ 1% (b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter. (underlining ours) 13 . M/s. Harsh International Pvt. Ltd. admittedly sold the capital goods in June and July, 2007 to M/s. Harsh International (Khaini) Pvt. Ltd. The dates of sale thus fall prior to the amendment made with effect from 13-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods after being put into use, the value shall be determined after allowing the benefit to depreciation as per rates fixed in Boards Letter dated 26-5-1993. The Respondent has utilized the machinery for nine years and paid duty on transaction value. The machine cleared after putting into use for nine years cannot be treated as Cleared as such . Insertion of proviso w. e. f. 13-11-2007 makes it clear that there is difference between machines cleared without putting into use and cleared after use. The Bombay High Court has upheld the view of the Tribunal in the case of Cummins India Limited v. CCE, Pune-III, 2007 (219) E.L.T. 911 (Tri.-Mumbai). The Tribunal in the case of Nahar Fibres has also dismissed Appeal of the Revenue and there is nothing to show that the said decision of the Tribunal has been set aside by any Court. 9. In these circumstances, we are of the considered opinion that the Appeal of the Revenue is bereft of merits so deserves to be dismissed. 10. The questions raised by Revenue are answered in favour of Assessee and Appeal is dismissed. 14 . Our attention was drawn to the judgment of the Bombay High Court in the case of Cummins India Ltd. v. CCE, dated 23-7-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to Rs. 20,42,257.90. According to the Revenue, the assessee had availed of the MODVAT credit on the material which it could not avail under the said notification. The assessee, in its reply to the show cause notice, took the stand that it had not availed of the MODVAT credit on the imported inputs and that it had availed of the Modvat credit only on the inputs/raw material purchased indigenously. 4 . The authority-in-original, viz., Commissioner of Customs, held that the assessee had availed of the Modvat credit and accordingly confirmed the duty demanded in the show cause notices. 5 . The assessee challenged the order of the adjudicating authority before the Customs, Excise and Gold (Control) Appellate Tribunal (for short, the Tribunal ). It was submitted by the assessee before the Tribunal that it had not availed of Modvat credit regarding imported inputs and that it had availed of the same for the input/raw material purchased from the local market. Learned members of the Tribunal afforded an opportunity to the departmental representative to verify this aspect. Departmental representative, on the adjourned date of hearing, stated before the Tribunal that he had not received a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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