INTAS PHARMACEUTICALS LTD. Vs. COMMR. OF C. EX. & S.T., AHMEDABAD-II
LAWS(CE)-2015-7-76
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on July 16,2015

Intas Pharmaceuticals Ltd. Appellant
VERSUS
Commr. Of C. Ex. And S.T., Ahmedabad -Ii Respondents

JUDGEMENT

H.K.THAKUR,MEMBER (T) - (1.)This appeal has been filed by the appellant against OIA Nos. 287 -2012 -AHD -II -CE -AK -COMMR -A -AHD, dated 31 -12 -2012 issued on 4 -1 -2013. The issue involved in the present proceedings is whether the appellant is eligible to get the refund claim of duty paid/reversed by them towards the clearances of old machines as waste from their Cenvat credit account. Shri Anand Nainawati (Advocate) appearing on behalf of the appellant argued that the first appellate authority had rejected their claim on the ground that the appellant has cleared waste and scrap of capital goods and that according to Rule 3(5A) of Cenvat Credit Rules, 2004, an amount equivalent to the duty leviable on the transaction value of waste and scrap was required to be paid. It was the case of learned Advocate that the clearances were made as complete machine and not as waste and scrap, wrongly understood by the lower authorities. He made the Bench go through the sale invoices of the old machinery to highlight that the machinery was sold as complete machine and not as waste and scrap. Learned Advocate also made the Bench go through the second proviso to Rule 3(5) of Cenvat Credit Rules, 2004 to argue that with respect to these machinery, the Cenvat credit taken on capital goods is required to be reduced @ 2.5% for each quarter of the year from the date of taking Cenvat credit. That as per Page 67 of the appeal memorandum, the Cenvat credit was taken on 16 -4 -1997, the machinery was sold on 16 -8 -2008. That following the reduction method as per the second proviso to Rule 3(5) of Cenvat Credit Rules, 2004, credit required to be reversed becomes zero on 25 -11 -2006 much before the date of sale. It was thus, his case that no credit with respect to old/used machineries was required to be reversed on the date of clearance of the used machine.
(2.)Heard both the sides and perused the case records. The issue involved in the present proceedings is whether any Cenvat credit is required to be reversed with respect to these machineries which were sold on 16 -8 -2008 and whether appellant is entitled to refund of the duty paid at the time of clearance. First Appellate Authority has rejected the claim of the appellant on the grounds that the capital goods were cleared as waste and scrap on which appropriate amount equal to the duty leviable on transaction value of such waste and scrap was correctly paid as per Rule 3(5A) of the Cenvat Credit Rules, 2004. No evidence has been brought on record by the Revenue to suggest that the capital goods, on which Cenvat credit was taken in 1997, were cleared as waste and scrap. On the contrary, appellant has furnished copies of the sale invoices under which the description of the goods is not shown as waste and scrap but as model of old machinery. In view of the factual matrix available on record, the case of the appellant was covered under the second proviso to Rule 3(5) and not under Rule 3(5A) of Cenvat Credit Rules, 2004. Following the provisions contained in Rule 3(5), after 10 years of use of the capital goods, the amount of credit required to be reversed becomes zero. Accordingly, it is held that the appellant was not required to reverse Cenvat credit taken with respect to the capital goods when removed from the factory as capital goods and was not cleared as waste and scrap of capital goods. Appeal filed by the appellant is, therefore, allowed. However, appellant should only take the credit in the Cenvat account as the entire amount was not paid in cash.
(Dictated and pronounced in Court)

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