Custom, Excise & Service Tax Tribunal
Om Pharmaceuticals Pvt Ltd vs Commissioner Of Central Excise Customs ... on 31 January, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20132 / 2014 Appeal(s) Involved: E/641/2008-SM [Arising out of Order-in-Appeal No. 91/2008 dated 26/05/2008 passed by the Commissioner of Central Excise (Appeals I) Bangalore] OM PHARMACEUTICALS PVT LTD 12TH MILE, OLD MADRAS ROAD, VIRGONAGAR POST, BANGALORE Appellant(s) Versus Commissioner of Central Excise Customs and Service Tax - BANGALORE-I POST BOX NO 5400...CR BUILDINGS, BANGALORE, KARNATAKA- 560001 Respondent(s)
Appearance:
Mr. S.R. Madhava Murthy, Consultant For the Appellant Mr. N. Jagadish, Adv For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Date of Hearing: 31/01/2014 Date of Decision: 31/01/2014 Proceedings were initiated by the department requiring the appellant to reverse the CENVAT credit. In the impugned order, the Commissioner (Appeals) has taken a view that appellant should reverse the credit after claiming depreciation in accordance with the Boards Circular No. 643/34/2002-CE dated 1.7.2002. This appeal is contesting the decision taken by the Commissioner (Appeals).
2. Heard both sides.
3. I find that the Commissioner (Appeals) who decided that the appellant should pay duty on the depreciated value along with interest has come to the conclusion based on the ratio of his own decision in an earlier case.
4. Heard both sides. As submitted by learned AR, I find that the decision of the Honble High Court of Punjab & Haryana in the case of CCE Chandigarh Vs Raghav Alloys Ltd. [2010-TIOL-881-HC-P&H-CX] is applicable to the facts of this case. In this case, the Honble High Court in paragraph 8 has observed as follows:
We have heard arguments of both the Ld. Counsel. The Tribunal has rightly noted that unlike inputs, which get consumed 100% with the same are taken up for use in relation to manufacture of finished goods, capital goods are used over a period of time. The capital goods loose their identity as capital goods only when after use over a period of time, the same has become in-serviceable and fit to be scrapped. The object of Cenvat Credit on capital goods is to avoid the cascading effect of duty. If even after use for a couple of years, the Cenvat Credit is required to be reversed then it would certainly defeat the object of the scheme. To avoid misuse of the scheme in the Rules, it has been provided that if the machines are cleared as such the Assessee shall be liable to pay duty equal to amount of Cenvat Credit availed. The machines which are cleared after utilization cannot be treated as machines cleared as such. With effect from 13-11-2007, a proviso has been added to Rule 3(5) of the Cenvat Credit Rules providing that if the capital goods on which Cenvat Credit has been taken are removed after being used, the manufacturer shall pay the amount equal to Cenvat Credit taken on the said capital goods reduced by 2.5% for each quarter of year or part thereof from the date of taking the Cenvat Credit. The Board has also in the Circular dated 1-7-2002 clarified that in the case of clearance 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 date 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 Vs CCE, Pune-III, 2007(219)ELT 911 (Tri-Mumbai)= (2007-TIOL-1620-CESTAT-Mum). 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. Following the decision of the Honble High Court of Punjab & Haryana, the appellant is required to reverse the credit after calculating depreciation as per the Boards Circular No. 643/34/2002-CE dated 1.7.2002. In view of the above, there is no merit in the appeal and accordingly the same is rejected.
(Order dictated and pronounced in open court) B.S.V.MURTHY TECHNICAL MEMBER pnr...3