Order date – 13th April 2023

Parties – Gujarat Alkalies and Chemicals Ltd Vs C.C.E. & S.T.-Vadodara-ii

Facts –

• The Appellant, GUJARAT ALKALIES AND CHEMICALS LTD, during the course of CERA Audit it was found that the appellant have received the insurance claim of Rs. 1,69,05,000/- .
• The surveyor's report confirmed that the damaged plants and machineries were unusable. The appellant had availed cenvat credit on the damaged capital goods, which led to the Department's opinion that the damaged machines were to be treated as usable after being put to use, and thus, the appellant was required to reverse the cenvat credit under sub-rule 5(A) of Rule 3 of the Cenvat Credit Rules, 2004.
• The demand is confirmed in the OIO, hence the present appeal is filed. 

Issue –

• Whether the capital goods, on which CENVAT credit was availed, to be cleared as usable capital goods or waste and scrap?

Order –

• It is well observed by the tribunal that the machine was used for almost 4 years before it got damaged.
• As per the Sub-rule (5A) of Rule 3, the removal of used capital goods can be done in two parts: when the used capital goods are in working condition, the amount of CENVAT credit shall be calculated by reducing the percentage points calculated by the straight-line method as specified; when the capital goods are cleared as waste and scrap, the assesse shall pay an amount equal to the duty leviable on the transaction value of such capital goods cleared as waste and scrap.
• The tribunal finds that the goods cleared as waste and scrap supporting the necessary documents is correct.
• The order is se aside and appeal is allowed.