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CUSTOM EXCISE & SERVICE TAX APPELLATE TRIBUNAL, MADRAS
MS. JYOTI BALASUNDARAM, Vice President
Chemplast Sanmar Ltd. -Appellant
Versus
Commissioner of Central Excise (LTU), Chennai -Respondent
Final Order No. 825 of 2010 Appeal No. E/447 of 2009
Decided On : 29-07-2010
Ms. Radha Chandrasekar,C. Rangaraju
1. A demand of Rs. 3,99,840 has been confirmed together with interest against the assessees herein under the provisions of rule 3(5) of the Cenvat Credit Rules, 2004, which provides that when input 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 output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs of capital goods. In addition, equal amount of penalty has been imposed on the assessees.
2. I have heard both sides. The Commissioner (Appeals) has clearly accepted in the impugned order that the assessees have not taken Cenvat credit on the Nitration Plant which are the goods in question. Therefore, the provisions of rule 3(5) are not attracted against the assessees. The Commissioner (Appeals) holding that there is a possibility that the previous owner of Nitration Plant viz., M/s. Kothari Sugars and Chemicals Ltd., may have taken Cenvat credit is not sufficient to invoke rule 3(5) against the assessees. Moreover, since the assessees purchased the entire factory in which the Nitration Plant was situated, there is no removal from the factory of the assessees in order to attract the provisions of rule 3(5). Therefore, the demand and penalty are not sustainable. Accordingly, I set aside the impugned order and allow the appeal.
