M/S Balkrishna Industries Ltd vs Cce, Aurangabad

[Arising out of Order-in-Appeal No. AGS(32)11/2010 dated 15.02.2010 passed by the Commissioner of Central Excise & Customs, Aurangabad].

For approval and signature:

Honble Shri M.V. Ravindran, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No 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 : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy : Seen of the order?

4. Whether order is to be circulated to the Departmental : Yes authorities? ======================================================

M/s Balkrishna Industries Ltd. Appellant

Vs.

CCE, Aurangabad Respondent

Appearance: Ms Rinky Jassuja, C. A. for Appellant

Shri H. M. Dixit, A.C. (AR) for Respondent

CORAM: HONBLE SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL)

Date of Hearing: 17.06.2015

Date of Decision: 17.06.2015

ORDER NO.

Per: Shri M. V. Ravindran, Member (Judicial)

1. This appeal is directed against Order-in-Appeal No. AGS(32)11/2010 dated 15.02.2010.

2. Heard both sides and perused the records.

3. On perusal of records, I find that the issue is regarding refund on an amount which was not payable. Appellant has purchased forklift and availed Cenvat Credit amounting to Rs.1,09,491/-; the same was sold on discharge of central excise duty of Rs.39,000/- after six years. Department objected by contending that appellant should have paid an amount equal to the credit taken, accordingly appellant reversed differential excise duty amounting to Rs.70,491/- along with interest of Rs.12,319/- under protest. Noticing that such payment of duty with interest is incorrect, they filed refund claim with the authorities. Both the lower authorities rejected the refund claim relying upon Rule 3(5) of Cenvat Credit Rules, 2004, holding that removal of forklift is as such requires reversal of Cenvat Credit availed.

4. I find that there is no dispute that forklift was removed after use in the factory premises of appellant. Revenues case of requirement of reversal entire amount of Cenvat Credit availed is an incorrect view. Honble High Court of Punjab & Haryana in the case of Raghav Alloys Ltd.  2011(268) ELT 161, in paragraph 8 while dealing on the same point held under.

We have heard arguments of both the Ld. Cousel. 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 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 Ltd. V/s CCE, Pune-III - 2007(219) ELT 911 (Tri.-Mum). The Tribunal in the case of Nahar Fibres has also dismissed Appeal of the Revenue and there is nothing do show that the said decision of the Tribunal has been set aside by any Court. It can be noticed from the above reproduced paragraph of Honble High Courts judgment, the issue is no more res-integra and is covered in favour of appellant.

5. In view of the forgoing and authoritative judicial pronouncement on the same issue, the impugned order is liable to be set aside and I do so. Impugned order is set aside and the appeal is allowed with consequential relief.

(Dictated in Court)

(M.V. Ravindran) Saifi Member (Judicial)

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