Custom, Excise & Service Tax Tribunal
Motor Industries Co. Ltd vs C.C.E., Jaipur-I on 4 April, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-DB
COURT III
Excise Appeal No.E/615/2007-EX [DB]
[Arising out of Order-in-Original No.02-03/2007 dated 19.01.2007 passed by the Commissioner (Appeals), Customs & Central Excise, Jaipur-I]
For approval and signature:
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HONBLE MR. R.K. SINGH, MEMBER (TECHNICAL)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Motor Industries Co. Ltd. Appellant
Vs.
C.C.E., Jaipur-I Respondent
Present for the Appellant : Shri.Swaminathan, Advocate
Present for the Respondent: Shri.S. Nanthuk, J.C.D.R.
Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HONBLE MR. R.K. SINGH, MEMBER (TECHNICAL)
Date of Hearing/Decision: 04.04.2016
FINAL ORDER NO. 51322/2016
PER: R.K. SINGH
The appeal has been filed against order in Original dated 18.01.2007 in terms of which the duty demand of Rs.81,62,763/- was confirmed along with interest and equal mandatory penalty was also imposed. The issue involved in this case is reversal of Cenvat credit on the capital goods when they were removed after use for some time. The appellant had acquired certain capital goods and took Cenvat credit thereon and after using them for about 3-6 years, cleared them to their sister unit in Bangalore reversing Cenvat credit as applicable on the depreciated value of the capital goods. The Commissioner (Primary Adjudicating Authority) held that the entire amount of Cenvat credit taken at the time of acquisition of these capital goods was required to be paid (reversed) at the time of clearance of these goods as capital goods were removed as such i.e. as capital goods and not as scrap.
2. Ld. Advocate for the appellant contends that capital goods removed after use cannot be said to be removed as such and as has been held by Delhi High Court in the case of Harsh International (Khaini) Pvt. Ltd. vs. Commr. of Central Excise - 2012 (281) E.L.T. 714 (Del.) there was no provision during the relevant period for reversal of Cenvat credit taken on capital goods which were not removed as such, adding that the capital goods removed after use cannot be said to be removed as such. He, however, conceded that the Lager Bench of this Tribunal in the case of CCE, Hyderabad-III Vs. Navodaya Plastic Industries Ltd. - 2013 (298) ELT 541 (Tri.-LB) has departed from the judgment of Delhi High Court in the case of Harsh International (Khaini) Pvt. Ltd. (supra) and held that the judgment of Madras High Court in the case of Rohini Mills - 2011 (264) ELT 367 (Mad.) depicted the correct position of law and held that CBEC Circular No. 643/34 -2002-CX dated 12.07.2002 prescribing deduction of 2.5% of credit for each quarter of use of the machine from date of taking cenvat credit was legal and proper. The ld. Advocate also pointed out that in the appellants own case for the earlier period, CESTAT vide final order No. 51934/14 has followed the Boards Circular dated 01.07.2002.
3. The ld. D.R. on the other hand stated that the appellant is located in Rajasthan and, therefore, the Larger Bench decision of CESTAT in the case of Novodaya Plastic Industries is squarely applicable and is binding and the amendment to Rule 3 (5) of Cenvat Credit Rules providing for reversal of cenvat credit based on the years of the use was made in 2007 while the period involved in this case is June & July, 2005.
4. We have considered the contentions of both sides. At the outset we would like to mention that is the appellants own case involving identical issue for an earlier period CESTAT vide final Order No. 51934/14 dt.15.04.2014 held as under:-
4. It stands held that the requirement of reversal of entire credit is only when the capital goods are removed as such. Where the same are cleared after continuous use in a number of years, the depreciated value in terms the boards circular No. 643/34/2002-Ex. Dated 1.7.2002 prescribing deduction of 2.5% of credit for each quarter of use of machine year from date of taking of Cenvat credit is required to be followed.
5. Accordingly, i set aside the impugned order and remand the matter to the original adjudicating authority for arriving at the depreciated value of the capital goods in question inasmuch as I nowhere find as to how the depreciated value stands arrived at by the appellant. However, I do not find it a case of imposition of penalty the same is accordingly set aside. Appeal is disposed in above manner. While passing the said order, CESTAT had taken note of the judgment of Harsh International passed by a Delhi High Court and also judgment of CESTAT in the case of Larger Bench in the case of Navodaya Plastic Industries (supra). It is trite to say that judgment of Delhi High Court would have binding effect within its jurisdiction notwithstanding the fact that the Larger Bench of CESTAT in the case of Navodaya Plastic Industries (supra) departed there from and chose to follow judgment of Madras High Court. However, the appellant in this case is based in Rajasthan which is outside the jurisdiction of Delhi High Court.
5. Indeed the judgment of the Larger Bench of Tribunal in the case of Navodaya Plastic Industries (supra) which was passed in respect of a unit located in Andhra Pradesh/Telangana would be squarely applicable with binding force to the present appeal because the Larger Bench had taken note of judgment of Delhi High Court in the case of Harsh International (supra) as also the judgment of Madras High Court in the case of Rohini Mills Ltd. (Supra) and also some other High Courts and held that the reversal of cenvat credit in accordance with the CBEC Circular dated 01.07.2002 represented the correct position in law. Indeed in the wake of said judgment this Tribunal has already passed an order dated 30.04.2014 in the appellants own case involving the same issue for a different period.
6. It is evident that on the issue involved in this case, Delhi High Court and Chennai High Court had taken different views. As per Delhi High Court, no cenvat credit was required to be reversed when capital goods were cleared after use. In these circumstances, it will be unjust and injudicious to subject the appellant to penalty, particularly when the appellant cleared the capital goods and paid duty at the depreciated value. Further, as the goods were cleared to its sister unit and duty paid would have been available to sister unit as credit, there could not have been any malafide on the part of the appellant. Indeed, in the appellants own case, CESTAT vide its order No.51934/2014 dated 15.04.2014 referred to earlier waived penalty altogether. Accordingly, no penalty is warranted in this case.
7. In the light of the forgoing, we set aside the impugned order and remand the matter to the Original Adjudicating Authority for arriving at the amount of cenvat credit liable to be reversed in accordance with the principle laid down by CBEC vide its circular No. 643/34/2002-EX dated 01.07.2002, which the appellant will have to pay with applicable interest, if not already paid.
(Dictated and pronounced in the open Court)
(R.K. SINGH) (S.K. MOHANTY)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
Anita
??
??
??
??
0
6