Custom, Excise & Service Tax Tribunal
M/S Panyam Cement & Mineral Industries ... vs Commissioner Of Central Excise, ... on 29 January, 2008
THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeals No: E/213/07 (Arising out of Order-in-Appeal No: 37/2005 (T) CE dated 8.12.2005 Passed by the Commissioner of Customs & Central Excise (Appeals), Guntur) 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? Yes 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s Panyam Cement & Mineral Industries Ltd., Appellant Vs. Commissioner of Central Excise, Tirupathi Respondents
Appearance Mr V.J. Sankaran, Adv for the Appellants Ms Sudha Koka SDR for the Revenue CORAM Dr. S.L. PEERAN, HONBLE MEMBER (JUDICIAL) SHRI T.K. JAYARAMAN, HONBLE MEMBER (TECHNICAL) Date of Hearing: 29.1.2008 ORDER No._______________________2008 Per Dr S.L. PEERAN This appeal arises from Order-in-Appeal No 33/05 dated 8.12.05 passed by the Commissioner (Appeals) confirming OIO passed by Joint Commissioner denying Cenvat credit in respect of capital goods removed by the assessee. The appellants contention is that the capital goods have been utilized for a long period of time and their removal does not attract payment of duty in the matter in terms of Rule 3 (4) of Cenvat credit rules. The appellants had sold the capital goods and paid duty on the basis of the transaction value arrived at, at the time of sale of used capital goods. This value has not been accepted by the Revenue and the revenue has taken the value of the capital goods as prevailing at the time of installation. This is under challenge.
2. Learned counsel submits that this very issue was decided in assessees favour by this Bench in the case of Madura Coats Pvt Ltd., Vs CCE Tirunelveli (2005 (190 ELT 450 (Tri-Bang). The Chennai bench has also decided the issue in assessees faovur in the case of Salona Cotspin Ltd., Vs CCE, Salem (2006 (201 ELT 592(Tri-Che). He submits that based on these rulings, this Bench has allowed the stay application unconditionally by Stay Order No 622/07 dated 2.8.07 and has listed the matter for final hearing. He files written submission as well as citations applicable to the facts of the case.
3. Learned SDR appearing for the revenue submits that the Revenue has not accepted both the rulings of the Tribunal and hasamended the law holding that the assessee is required to reverse the credit that was taken at the time of installation of the capital goods. However the amendment grants depreciation and this depreciation can be given in the present case. Learned counsel submits that the amended provisions will have only prospective effect and it cannot have retrospective effect to the present issue and therefore the judgments are clearly applicable to the facts of the case.
4. We have carefully considered the submission. We notice that the assessee was eligible for Cenvat Credit on the used capital goods sold by them. This issue was decided in the case of Madura Coats and Salona Cotspin Ltd., (supra). Both the rulings decide the issue in assessees favour. The subsequent amendment holding that they are eligible for depreciation on the value of the capital goods as set up at the time of installation will have only prospective effect. In the case of Madura Coats Pvt Ltd., in para 2- 5 it has been held as herein below.
2. The facts of the case are as follows:
The appellants had a 100% EOU by name M/s. Madura Coats India Pvt. Ltd. 100% EOU. The said unit was debonded on the 3rd December 2001 after payment of appropriate duties on all inputs and machines lying in the factory. Thereafter, the appellants operated the said unit in the name and style of M/s Madura Coats Ltd., Millennium Mills. Credit of duty was availed on inputs and machines lying at the time of debonding of 100% EOU. During July 2002, the appellants stopped their manufacturing activities and sold the capital goods to various consumers on payment of duty on the transaction value of the said machines removed during the period from 1-3-2003 to 31-7-2003.
The jurisdictional officer demanded an amount of Rs. 1,35,260/- on the capital goods removed. This amount is equal to the Cenvat credit availed on the goods. Interest under section 11AB was demanded. Penalty of Rs. 50,000/- was imposed under Rule 25 of the Central Excise Rules, 2002 read with Rule 13 of Cenvat Credit Rules, 2002. Aggrieved over the decision of the jurisdictional authority, the appellant approached the Commissioner (Appeals). The Commissioner (Appeals) set aside the demand and allowed the appellants appeal on the ground that there is no specific provision for demand of duty on removal of used Cenvated capital goods. It is not in dispute that the appellants have sold the used goods to independent consumers and paid duty on the transaction value.
Even though the order of the Commissioner (Appeals)s is in favour of the appellants, they have filed this appeal.
3. Mr. 5.5. Thakur, Vice President, Madura Coats Pvt Ltd. appeared on behalf of the appellants. Mr R.V. Ramakrishnappa, learned departmental representative appeared for the Revenue
4. Mr Thakur made the following submissions.
The Commissioner (Appeals) has recorded a clear finding that the provisions of Rule 3(4) of Cenvat Credit Rules, 2001/2002 are not applicable to removal of used Cenvated capital goods. It was absurd for him to hold that duty is leviable on used Cenvated capital goods in as per Boards Circular dated 1-7- 2002 which was issued with reference to removal of Cenvated capital goods in such condition (without being used) under Rules 3(4) of Cenvat Credit Rules, 2001 /2002.
5. We have gone through the records of the case very carefully. The Commissioner (Appeals) has given a clear finding that there is no provision to demand duty on removal of used Cenvated capital goods. He has also referred to the Boards Circular dated the 1st July 2002. We want to make it clear that the above Circular is applicable only to capital goods removed as such and not to the used Cenvated capital goods. In other words, the appellant is not required to pay duty when the used machinery is sold. Hence, the appeal is allowed with consequential relief.
The findings in the case of Salona Cotspin Ltd., in para 7 are reproduced herein below.
7. I have carefully considered the rival submissions. The appellants have removed used capital goods after applying depreciation as provided in the erstwhile Rule 57S(2) in respect of the machine removed on 11-2-2002 when the legal provisions required that they pay duty on the transaction value. They removed the remaining goods on payment of duty on transaction value when the relevant rules had changed requiring them to reverse the credit originally availed. In this context, the definition of the expression capital goods removed as such interpreted by the Bangalore Bench of the Tribunal is relevant. According to the Honble Tribunal, used capital goods are not covered by Rule 3(4) of Cenvat Credit Rules, 2001/2002. Therefore, the appellants argument that they are not required to pay even the duty they paid carries considerable force. Moreover, it is difficult to deny the assertion that the SCN was issued in this case much beyond the normal period with no grounds to justify invocation of larger period. Therefore, the proceedings initiated with the SCN dated 30-8-2004 are not sustainable. Accordingly, I set aside the impugned order and allow the appeal We are of the considered opinion that the ratio of both the judgments would apply to the facts of the case. Respectively following the ratio of the above noted judgments, the impugned order is set aside and appeal allowed with consequential relief.
(Pronounced and dictated in open court) (T.K. JAYARAMAN)Member (T) (DR S.L.PEERAN) Member (J) /pnr/