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TMI Blog2025 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... d after being put to use, the question of considering the capital goods cleared 'as such' for the purpose of reversal of credit cannot be sustained. Moreover, the Commissioner (Appeals) in the impugned order clearly notes that Notification No.39/2007 Central Excise (NT) dated 13.11.2007, the benefit of payment of amount equal to the cenvat credit taken on the said capital goods reduced by 2.5% for each quarter of a year or part thereof from the date of taking the credit has been provided for on removal of the capital goods being used, but holds that this benefit is available only from 13.11.2007 onwards.
Conclusion - There are no reason to deny the benefit of depreciation to the used capital goods for discharging the duty on the reduced value at the time of clearance.
The impugned order is set aside and the appeal stands allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. Vs. Commissioner of C. Ex. Raigad: 2008 (232) ELT 29 (Tri. -LB). 5. Heard both sides. The only issue to be decided is whether the appellant was required to reverse the credit taken on the capital goods or pay duty on the transaction value at the time of clearance. From the worksheet enclosed along with the show- cause notice, it is seen that the capital goods were purchased in the year 1994-1995, 1995-1996, 1996-1997, 2002-2001, 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2006-2007 and were cleared to M/s. Volvo India Pvt. Ltd. under the Invoice No .236 dated 04.05.2007 on payment of duty of Rs.80,53,153/- on the transaction value of Rs.7,76,47,919/-, but the credit availed on these capital goods was Rs.1,14,06,152/-. The claim of the appellant is that these capital goods were put to use and were not cleared 'as such', hence, question of reversal of credit does not arise. 5.1. During the relevant period Rule 3(5) of the Cenvat Credit Rules, 2004 read as follows: "3(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting', 'repairing' and 'reconditioning' would become redundant, and any interpretation which results in rendering any portion of rule or legislation redundant, should be avoided, as held by the apex court in Amrit Paper v. CCE, Ludhiana - 2006 (200) E.L.T. 365 (S.C.) and Rajesh Kumar Sharma v. UOI - 2007 (209) E.L.T. 3 (S.C.)." 6.1. Relying upon the above decision the Revenue holds that even if the capital goods were put to use, they need to reverse the entire credit taken on the said capital goods. However, the Hon'ble High Court in the case of Commissioner of C. Ex., Chandigarh Versus Raghav Alloys Ltd. referring to the above decision of the Larger Bench observed as follows: "5. The Revenue has sought to raise following Questions of law: I Whether the expression 'capital goods cleared as such' includes capital goods cleared as such after being used in terms of Rule 3(4) of the Cenvat Credit Rules, 2002? II Whether a two member bench of Tribunal could have adopted an interpretation of the phrase "as such" which is different from the interpretation given by a Larger Bench of the Tribunal in the case of Modernova Plastyles Private Limited v. CCE, Raigad reported as 2008 (232) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the new Valuation Rules on the question of valuation with regard to removal as such clarified as follows: "How will valuation be done when inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, under the erstwhile sub-rule (1C) of Rule 57AB of the Central Excise Rules, 1944, or under Rule 3(4) of the Cenvat Credit Rules, 2001 or 2002 ? Where inputs or capital goods, on which credit has been taken, are removed as such on sale, there should be no problem in ascertaining the transaction value by application of Sec. 4(1)(a) or the Valuation Rules. [provided tariff values have not been fixed for the inputs or they are not assessed under Section 4A on the basis of MRP]. There may be cases where the inputs or capital goods are removed as such to a sister unit of the assessee or to another factory of the same company and where no sale is involved. It may be noticed that sub-rule (1C) of Rule 57AB of the erstwhile Central Excise Rules, 1944 and Rule 3(4) of the Cenvat Credit Rules, 2001 (now 2002), talk of determination of value for "such goods" and not the "said goods". Thus, if the assessee partly sells the inputs to independent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Commissioner of Central Excise, Salem v. Rogini Mills Ltd. had observed as follows: "6. In the first place, the provision for reversal of the Cenvat credit availed has been provided for under Rule 3(4)(C) of the 2004 Rules. When we peruse the order of the Principal Bench, New Delhi in its order reported in 2009 (242) E.L.T. 124, we find a reference to the Board's Circular No. 643/34/2002-C.X., dated 1-7-2002, a Board's letter bearing No. 495/16/1993-Cus., VI, dated 26-5-1993 and also a provision, which was added to Rule 3(5) of Cenvat Credit Rules 2004 (corresponding to Rule 3(4) of Cenvat Credit Rules, 2002), which stipulated that the capital goods on which Cenvat credit had been taken or removed after being used, the Manufacturer should pay an amount equal to the Cenvat credit taken on the said capital goods reduced by 2.5% for each quarter of a year or part thereof from the date of taking the Cenvat credit. The Board's Circular dated 1-7-2002 stated that the capital goods on which Cenvat credit had been taken or cleared under Rule 3(4), the Manufacturer would be required to pay an amount equal to the duty at the rate prevailing on the date of clearance and on the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dships observed as follows: "6. The factual scenario that existed in the present matter is that the appellant had purchased capital goods and brought them into its factory in Goa and had put them to use during the period from 1999 to 2004. In December, 2005, the said capital goods were removed from Goa and shifted to the appellant's factory in Himachal Pradesh." 7. In the CENVAT Credit Rules, 2002, the proviso to sub-rule (5) of Rule 3 provided thus : "Provided also that 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." 8. However, when the CENVAT Credit Rules were modified in 2004, the said proviso was not there in the said Rules. Subsequently by an amendment carried in 2007, the said proviso has been added. 9. The said proviso to sub-rule (5) of Rule 3 of 2004 Rules, is in tune with Rule 57-S(2)(b) of the Central Excise Rules, 1944 (in short "1944 Rules"), which provide that : "where capital go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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