Order date – 20 October 2022

 Facts –

• The appellant, M/s Simbhaoli Sugars Limited, are engaged in the manufacture of sugar, molasses and distillery products, which are dutiable. The other appellant Sh. Gurmit Singh Mann is the Chairman-cum-Managing Director of the appellant company. The appellant have got one unit at Chilwaria, District Bahraich (U.P) and the other unit is located at Simbhaoli .
• The Plant and Machinery (P&M) of power plant installed in appellant’s units, on which cenvat credit was availed, were transferred to M/s SPPL, Simbhaoli & Chilwaria respectively and during the course of such transfer, premises on which plant & machinery was installed was also simultaneously transferred on lease.
• The Capital Goods (P&M) installed in the premises were thus removed/ transferred out of the registered premises of the appellant’ units by altering the boundary of premises registered under Rule 9 of the Central Excise Rules. The same were effectively removed from their premises and got entered in the premises of M/s SPPL, Chilwaria and M/s SPPL, Simbhaoli respectively and thereby such transfer by BTA were nothing short of physical removal of cenvated P&M. Also the same was not reported to jurisdictional Central Excise Office/authorities.
• Accordingly, a show cause notice dated 12.01.2018 both the appellant’s units were called upon to show cause as to why not the amount of duty as collected by Revenue should not be demanded and recovered under Rule 14 of Cenvat Credit Rules with proposal to appropriate the amounts already deposited during investigation along with interest. Further, penalty was also proposed on the Director-cum Chairman, Sh. Gurmit Singh Mann.

Issue – 

• Whether the provision of Rule 3(5A) of Cenvat Credit Rules, 2004 attracted?

Order – 

• The Tribunal observed that as per the provisions of Rule 3(5A) of Cenvat Credit Rules, 2004 are attracted when the capital goods on which cenvat credit has been taken, are removed after being used whether as capital goods or scrap and waste. The expression “removal” is not defined in the CCR, 2004 nor in CEA, 1944 nor in CER, 2002. However, the Hon‟ble Supreme Court in the case of J.K. Spinning & Weaving Mills Ltd., Vs. Union of India - 1987 (32) ELT 234 (S.C.) observed that the word “removal” contemplates physical shifting of a thing from one place to another.
• It is not in dispute that the appellant as seller has transferred the entire movable and immovable assets and liabilities as a going concern on “as is where is basis” to the purchaser without uprooting or physically shifting the capital goods from the place of installation of the power plant. Central Excise Rules, 1944 or the Central Excise Rules, 2002, the manufacturer of excisable goods was required to pay duty on the goods removed from the factory or the bonded warehouse.
• The Tribunal held that both the appellants viz. M/s Simbhaoli Sugars Ltd., Chilwaria and Simbhaoli were not required to reverse the cenvat credit on sale of capital goods, as part of running power plant, in terms of rule 3(5A) of CCR,  2004 as there is no removal of capital asset. Further held that no penalty is imposable under Rule 26 of CER, 2002 on the Chairman of the appellant company.
• Hence the appeal is allowed.