- (1.) The appellant (hereinafter described as 'the assessee') has filed the present appeal before this Court under Section 35G of the Central Excise Act, 1944 (for short, the Act) against the order dated 20-11-2007 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (for short, the Tribunal') in Excise Appeal No. 3891 of 2005-SM, raising the following substantial questions of law : "(i Whether Rule 3(4) of Cenvat Credit Rules, 2002 is applicable on capital goods removed after use ? (ii Whether the impugned order passed by Tribunal is perverse and against the basic scheme of the Cenvat ? (ii Whether appellant is liable to penalty when no mens rea is involved?"
(2.) Learned counsel for the assessee submitted that the assessee in the present case is engaged in the manufacture of non-alloy steel ingots falling under Chapter Heading 72 of the first Schedule to the Central Excise Tariff Act, 1985. In 1994, the assessee purchased one induction furnace and in terms of the Central Excise Rules, 1944, the assessee availed Modvat credit of the duty paid on purchase thereof. The said furnace was used by the assessee till 2003. Thereafter, the same was knocked down and sold as scrap vide Invoice No. 153 dated 28-5-2003. On the bill so raised, a sum of Rs. 32,000/- was paid as duty. On 2-6-2004, the assessee was issued a notice to show cause as to why duty of Rs. 98,000/- should not be recovered from him in terms of Rule 12 of the CENVAT Credit Rules, 2002 (for short, the Rules') read with Section 11A of the Act. This was for the reason that the assessee initially had availed of Modvat credit of Rs. 1,30,000/- at the time of purchase of the induction furnace as capital goods in the year 1994 and finally when the same was sold in 2003 as scrap, only a sum of Rs. 32,000/- was paid as duty and difference was sought to be recovered from the assessee. The adjudicating authority did not agree with the contention raised by learned counsel for the assessee to the effect that no duty as such was payable as the capital goods had not been disposed of as such, rather the same were used by the assessee for a period of about 9/10 years and finally sold as scrap. The demand of Rs. 98,000/- was confirmed against the assessee.
(3.) In appeal before the Commissioner (Appeals), the assessee succeeded and the order passed by the adjudicating authority was set aside.;