Page 92 - GSTL_30th April 2020_Vol 35_Part 5

578 GST LAW TIMES [ Vol. 35
(vii) Circular No. 643/34/2002-CX, dated 1-7-2002
(viii) Circular No. 813/10/2005-CX, dated 25-4-2005
(ix) Circular No. 816/13/2005-CX, dated 16-6-2005
(x) Sidharth Tubes - 2008 (228) E.L.T. 193 (Tri. - Del.)
3. The Learned Authorised Representative for the department reiterat-
ed the findings of the OIA and relied upon National Engineering India Ltd. v. CCE,
Jaipur-I 2010 (258) E.L.T. 97 (Tri. - Del.).
4. Heard both sides and perused the records of the case. Brief issue in-
volved in the case is to whether duty equal to credit is payable on clearance of
Cenvat availed capital goods by the [firm of] the appellants or duty is payable at
the rate and value prevalent on the date of clearance, deeming that the capital
goods are manufactured by the appellants and as to whether the demand is
barred by limitation. The appellants have removed capital goods to their sister
concern on 20-2-2002 and 25-3-2002 reversing an amount of Rs. 10,82,206 i.e.
equivalent to the credit availed by them on such capital goods. The department
contends that the appellants are required to pay an amount of Rs. 17,31,833 being
the applicable duty @ 16%, in terms of sub-rule (4) of Rule 3 of Cenvat Credit
Rules, 2001. Show cause notice was issued alleging that difference of Rs. 6,48,801
was short paid.
4.1 Sub-rule (4) of Rule 3 as it existed at the time of Removal (during
the period 1-7-2001 28-2-2002) of [xxx] of the capital goods by the appellant reads
as under :
When the inputs or capital goods, on which Cenvat credit has been taken,
are removed as such from the factory, the manufacturer of the final prod-
ucts shall pay an amount equal to the duty of excise which is leviable on
such goods at the rate applicable to such goods on the date of such removal
and on the value determined for such goods under Section 4 or Section 4A
of the Act, as the case may be. And such removal shall be made under the
cover of an invoice referred to in Rule 7.
The department relies on this Rule and Commissioner (Appeals) has also upheld
the same. However, C.B.E. & C. vide Circular No. 643/34/2002-CX, dated 1-7-
2002 holds that in that case, it would be reasonable to adopt the value shown in
the invoice on the basis of which Cenvat credit was taken by the assessee in the
first place. In respect of capital goods adequate depreciation may be given as per
the rates fixed in Letter F. No. 495/16/93-Cus. IV, dated 26-5-1993, issued on the
customs side. Further C.B.E. & C. Circular No. 813/10/2005-CX, dated 25-4-2005
confirms that in respect of removal of capital goods on which credit has been
taken under erstwhile sub-rule (1C) of Rule 57AB of CER, 1944 or under Rule
3(4) of Cenvat Credit Rules, 2001 or 2002, the provisions of Rule 3(5) of Cenvat
Credit Rules would apply. Rule 3(5) of Cenvat Credit Rules, 2004 reads as under :
When inputs or capital goods, on which Cenvat credit has been taken, are
removed as such from the factory, or premises of the provider of output
service, the manufacturer of the final product or provider of the output ser-
vice, as the case may be, shall pay an amount equal to the credit availed in
respect of such input or capital goods and such removal shall be made un-
der the cover of an invoice referred to in Rule 9.
However, Learned Commissioner finds that the above Circulars will be applica-
ble only for the period prior to 1-7-2002 and at the time of clearance Rule 3(4) was
operational.
GST LAW TIMES  30th April 2020  92