Case Law Details
Simbhaoli Sugars Limited Vs Addl. Director General (CESTAT Delhi)
CESTAT Delhi held that provisions of rule 3(5A) of the Cenvat Credit Rules are not attracted when there is no removal of capital assets/ power plant. Hence, Cenvat Credit not leviable.
Facts- The appellant units are engaged in the manufacture of sugar, molasses and distillery products, which are dutiable.
Both the appellant units are equipped with a power plant (co-generation plant) within their factory company unit, electricity is generated by the use of steam and fuel baggage is used. The electricity / electrical energy is covered under CETH 27160000 and is chargeable to a Nil rate of duty.
The appellant availed MODVAT/ CENVAT credit in the past on procurement of inputs (used in the fabrication of capital goods), capital goods/plant and machinery for the purpose of setting up of power plant.
Thereafter, the appellant sold/ transferred the ownership of the entire power plant to their subsidiary company M/s SPPL on a slump sale basis at aggregate sale consideration of Rs. 85 Cr. without shifting or removing physically the capital goods as such from the registered premises.
Notably, the assessees filed an order of adjudication passed by the Additional Director General (Adjudication), DGGSTI whereby cenvat credit has been demanded on capital goods power plant under Rule 3(5A) of Cenvat Credit Rules, 2004 on the appellant company along with penalty, penalties have also been imposed on the Director of the appellant under Rule 26.
Conclusion- Hon’ble Madras High Court in the case of Dalmia Cements (Bharat) Ltd has held that the language of rule 3(5) is simple and plain. When the inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, the credit availed in respect of inputs or capital goods shall be paid. This situation has not arisen in the present case as no invoice was issued for removal of goods from the factory premises and the said rule is not applicable in the case of the assessee.
held that in the facts and circumstances of the present case, there is no removal of capital assets/power plant. As There have been no removal, the provision of Rule 3(5A) of Cenvat Credit Rules are not attracted.
FULL TEXT OF THE CESTAT DELHI ORDER
These appeals are arising from common order of adjudication passed by the Additional Director General (Adjudication), DGGSTI, New Delhi, whereby cenvat credit has been demanded on capital goods – power plant under Rule 3(5A) of Cenvat Credit Rules, 2004 on the appellant company alongwith penalty, penalties have also been imposed on the Director of the appellant Sh. Gurmit Singh Mann of Rs. 50 lakhs under Rule 26.
2. Brief facts of the case are that the appellant units (at Chilwaria and Simbhaoli) 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. Simbhaoli Sugars have got one unit at P.O. Chilwaria, District Bahraich (U.P.) (hereinafter referred to as SSL, Chilwaria or the appellant-I) and the other unit is located at Simbhaoli (hereinafter referred to as SSL, Simbhaoli or the appellant-II).
3. Both the appellant units are equipped with power plant (co-generation plant) within their factory company unit, electricity is generated by use of steam and for fuel baggase is used. The steam produced in the power plant (boiler house) is used partly by the appellant unit for running the plant and machinery and part of the steam goes to the turbine in the power plant for generating electricity. Part of the electricity is captively used in the manufacturing of sugar molasses etc., by the appellant and surplus electricity is wheeled to U.P. Power Corporation Limited (UPPCL), against consideration. The electricity / electrical energy is covered under CETH 27160000 and is chargeable to Nil rate of duty.
3.1 The facts of the appeal filed by Chilwaria and Simbhaoli units of the appellant company M/s Simbhaoli Sugars Ltd., are similar and involve identical issue. For convenience we are describing the facts of Appeal No. E/50380/2021-DB, as lead case.
3.2 The appellant availed MODVAT/ CENVAT credit in the past on procurement of inputs(used in fabrication of capital goods),capital goods/plant and machinery for the purpose of setting up of power plant. The capital goods were assembled and installed together to form a power plant. The capital goods were installed /embedded into the earth and post-installation they became part of the immovable property and ceased to be movable/transportable from one location to another, without cannibalising the structure and the capital goods.
3.3 In January, 2013 the appellant sold/ transferred the ownership of the entire power plant to their subsidiary company viz. M/s Simbhaoli Power Pvt. Limited (SPPL) on slump sale for lumpsum consideration on “as is where is basis”. For this purpose, the appellant entered into Business Transfer Agreement (BTA) dated 25.01.2013 with M/s SPPL, for transfer of power plant on slump sale basis.
3.4 The items of plant and machinery, buildings and misc. Civil structures installed in the power plant were transferred by the appellant to SPPL as going concern are disclosed in the schedule-I of the Business Transfer Agreement (BTA). The items of plant and machinery such as Turbine Generator Set, Electrical Sub-Station Panel Room, Ash Handling System, Boilers, Steam Lines, Baggase Carrier, RO and DM plant etc. forming part of the power plant are such that these are immovable property and cannot be removed as such.
3.5 The appellant No. 1 transferred the entire power plant to M/s SPPL on slump sale basis for an aggregate sale consideration of Rs. 85.00 Cr. without shifting or removing physically the capital goods as such from the registered premises. However, to comply with registration provisions of Central Excise Rules, 2002, the site plan of the appellant‟s factory was revised and consequently, the power plant stood out in the revised site plant of the appellant‟s sugar factory. Since electrical energy was non-excisable goods (nil rated) the transferee company M/s SPPL did not take excise registration. However, they took service tax registration as independent assessee / service provider / service recipient.
3.6 The appellant did not transfer the title in the land of the power plant to the transferee. The appellant gave the land on lease to the transferee/ SPPL against lease rent of Rs. 24 lacs per annum. The appellant subsequently also got the boundary of the land on which the plant is situated by separating area of the power plant in the Central Excise registration.
4. M/s Simbhaoli Power Private Limited is a 51% subsidiary of appellant company wherein the balance shares are held by M/s Sundicatum Captive Energy Singapore Pte Limited.
5. A search was conducted by the Officer of Department at the factory premises at Chilwaria on 13.10.2015 and panchnama was drawn. Some documents were also resumed and physical verification of finished goods was also done. Statement of Sh. K. N. Singh, General Manager (Finance) was also recorded on the same day who inter alia stated that sugar unit and distillery unit are running from the same premises. Further, SPPL is also functioning from adjacent premises on lease land belonged to the appellant. The land was leased out to the SPPL since 26.01.2013. SPPL was incorporated on 21.06.2011 and subsequently in 2013 they entered into joint venture with M/s Sundicatum Captive Energy Singapore Pte Limited. The said subsidiary company is operating the power plant wherein power is generated from biomass fuel (bagasse). Further, stated that SPPL is subsidiary company of SSL having common Directors. The capital goods – plant and machinery of the power plant were transferred to SPPL under BTA for consideration of Rs. 85 cr. on as is where is basis. Further, the piece of land on which the power plant is situated have also been leased out to SPPL for consideration of Rs. 24 lacs per annum vide lease deed dated 25.01.2013. The capital goods transferred under BTA includes turbines, which was acquired in the year 2008-09 on which cenvat credit have been availed of Rs. 19,61,375/- basic duty and Rs. 82,405/- towards cess. As regards the other parts and machineries of the power plant, it was stated that the appellant shall reconcile with their cenvat credit register as regards credit availed, if any, and shall provide the details in due course. It was further stated that the transfer of power plant to SPPL was executed by their Board of Directors through BTA. Further, no Central Excise invoices in relation to transfer of such plant and machinery was issued by appellant and thus no Central Excise duty have been paid by them on such transfer.
5.1. It was further stated that the area of both the appellant factory and power plant (under the control of SPPL), are separate as per ground plan under the Factories Act w.e.f. 25.01.2013. However, such change have not been intimated to Central Excise Department for necessary amendment in the Central Excise registration. It was further stated that they are paying service tax under „Business Auxiliary Services‟ for services provided to SPPL being charges towards facility charges, lease land and charges of plant and machinery. The agreement dated 25.01.2013 of providing such services to SPPL was also produced before the officer. It was further stated that they are discharging service tax liability under reverse charge on services like Manpower Recruitment Agency Service, Security Agency Service etc.
6. Statement of Sh. Md. Faishal, Manager (Accounts) of SPPL was also recorded on 09.11.2015. He inter alia stated that they are engaged in power generation activities wherein power is generated by using biomass fuels like bagasse, rice husk, cane trash, paddy straw etc. Upon generation of power they sell the power as per requirement of the appellant sugar company and the surplus power, if any, is sold to UPPCL. He further stated that they have purchased the plant and machinery of the power plant from the appellant. He further stated that except the BTA they have not received any invoice relating to such transfer from the sugar company. It was further stated that they have not disposed or removed any of the plant and machinery received on transfer from the sugar company. They have only purchased only the plant and machinery, but not the land. Land and other facilities are being used by the power company under facility agreement for which they are making payment to SSL. They are also registered with Service Tax Department and are not availing credit of service tax on the input services nor have availed cenvat credit on excise duty on the capital goods. They also added some more plant and machinery worth Rs. 59 cr. but not availed any cenvat credit on the same. The power generated and supplied to SSL, Chilwaria have two components – one for which they are under agreement, is not valued, while for the other component which is called as surplus, is supplied at the market value and such market value is equal to the value on which power is supplied to UPPCL.
7. On perusal of Director’s report with consolidated and annual financial statement for the financial year 2012-13 of SSL, it appeared to Revenue that SSL have transferred its power unit (the existing power business) in both the sugar units located at Simbhaoli and Chilwaria including all its assets, liabilities, rights and obligations to SPPL at an aggregate consideration of Rs. 159.78 cr. on 25.01.2013.
8. SSL, Chilwaria vide letter dated 26.11.2015 submitted details and description of capital goods transferred to SPPL alongwith details of documents on which credit was availed, details of cenvat credit availed, copy of balance sheet, profit and loss account, assets valuation report etc.
9. Further, statement of Sh. Md. Aslam, Deputy Manager (Accounts) of SPPL was recorded on 26.11.2015, wherein he inter alia stated that SPPL is in the nature of joint venture between SSL and Singapore based M/s Sundicatum Captive Energy Singapore Pte Limited, wherein 51% shares are held by SSL and 49% shares are held by M/s Sundicatum Captive Energy Singapore Pte Limited, Singapore based company. He further stated that their power plant/ unit was surrounded in all directions by the premises of SSL. They have further added plant and machinery to the existing plant and machinery of the power plant to enhance the generation capacity. Such details are maintained in capital work in progress register. He further stated that no plant and machinery (which have been received on transfer) has been removed from its existing location.
10. On the basis of enquiries and investigations, it appeared to Revenue-
(i) It appears that Plant and Machinery (P&M) of power plant installed in M/s SSL, Simbhaoli & Chilwaria, 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.
(ii) The Capital Goods (P&M) installed in the premises were thus removed/ transferred out of the registered premises of M/s SSL at Chilwaria and Simbhaoli by altering the boundary of premises registered under Rule 9 of the Central Excise Rules.
(iii) Consequent to such alteration of boundary premises, the aforesaid capital goods installed in the factory of M/s SSL, Chilwaria and M/s SSL, Simbhaoli 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. Such transaction of sale of power unit and the simultaneous lease of premises were wisely resorted to by the noticees to avoid the tax liability on them on the ground that power unit was not physically removed from the premises.
(iv) The above alteration of registered premises of both the said units as per Factories Act, was never reported to jurisdictional Central Excise Office/authorities. Such conduct on the part of assessee was to suppress such transfer of cenvatable P&M from the jurisdictional Central Excise Authorities.
(v) The noticees were well aware with the legal position in this regard and deliberately did not pay the amount leviable as Central Excise Duty on transaction value of cenvatable P&M transferred, as discussed above.
(vi) Gurmit Singh Mann, a whole time Director of the company and the then Chairman of the company, when decision was taken to transfer the said cenvatable P&M, without payment of amount equal to central excise duty leviable on transaction value, has wilfully avoided the above payment in violation of the provisions of Central Excise Act, 1944 and the Rules made thereunder.
11. Further it appeared to Revenue that the appellant have not given proper information to the Department of such transaction wherein they transferred their power plant to SPPL on as is where is basis under BTA, and have violated the provisions of Rule 3(5A) of Cenvat Credit Rules under which they were required to pay the proportionate amount of cenvat credit (after depreciation, if any), to the exchequer as applicable to them, read with Notification No. 18/2012-CE (NT). Further, the appellant have not shown the changes in the boundary of their registered premises as required under Rule 9 of Central Excise Rules, 2002 and have also not disclosed the relevant details of transfer/ removal of plant and machinery in their monthly return as required under Rule 12 of Central Excise Rules, 2002. Therefore, it appeared that the appellant have deliberately not disclosed such facts of transfer of capital goods to the Department with intent to evade the amount payable as Central Excise duty (reversal of cenvat credit) on the transaction value of transferred capital goods. It further appeared that Central Excise duty amounting to Rs. 10,58,45,158/- is due from SSL, Simbhaoli and Rs.9,40,41,611/- from SSL, Chilwaria. Accordingly, vide common 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 alongwith interest. Further, penalty was also proposed under Rule 15(2) of Cenvat Credit Rules read with Rule 25 of Central Excise Rules. Further, penalty was also proposed on the Director-cum Chairman, Sh. Gurmit Singh Mann.
12. The Adjudicating Authority confirmed the proposed demands with respect to both the units on contest and further imposed 50% penalty relying on the ruling of Hon’ble Karnataka High Court in the case of CCE, Belgaum vs. Associated Cement Co. Ltd., – 2009 (236) ELT 240 (Kar.), wherein the Hon’ble High Court held under similar facts and circumstances that though there was no physical removal of the power plant and machinery between ACC and Tata Electric Co., (to whom ACC sold the entire power unit for lumpsum consideration) it certainly amounted to nothing short of physical removal of the power unit, in respect of which modvat credit have been availed by ACC.
13. The Adjudicating Authority further observed referring to clause 2.1.3 of BTA that the capital goods transferred were mainly of movable nature and capable of being passed on by physical delivery of possession. Consequently the contention of appellant regarding transfer of immovable plant and machinery, and thus the same being non excisable, was rejected.
14. On the objection of limitation to invocation of extended period of limitation raised by the appellant, it was held that in view of the ruling of Hon‟ble Karnataka High Court in the case of ACC, wherein the facts are similar but still the appellant have not discharged their duty liability.
15. Being aggrieved with the impugned order the appellants are in appeal before this Tribunal. Separate appeal has also been filed by the Chairman Sh. G.S. Mann on whom penalty under Section 26 has been imposed.
16. Learned Counsel for the appellants Sh. S. C. Kamra inter alia urges as follows:-
16.1 That the provisions of Rule 3(5A) of CCR, 2004 are applicable when the capital goods, on which CENVAT credit has been taken, are removed, after being used, whether as capital goods or waste and scrap. The basic criteria is the “removal” of capital goods and not the sale-purchase of capital goods. In other words, the transfer of ownership of capital goods by the transferor to the transferee is not relevant for invoking rule 3(5A).
16.2 That the Revenue has relied upon the following judgments of the Supreme Court:-
(i) State of Maharashtra Vs. Embee Corporation, Bombay – (1997) 7 SCC 190.
(ii) State of Andhra Pradesh Vs. Kone Elevators (India) Ltd. – 2005 (181) ELT 156 (S.C.)
The appellant submits that both the above judgments refer to the sale of goods/ works contract transactions, taxable under the State Sales Tax Act. In the case of Embee Corporation, the issue before the Apex Court was whether the expression “sale or purchase occasions such import” occurring in section 5(2) of CST Act, 1956, requires that a completed sale should precede the import of goods. Similarly in the case of Kone Elevators, the Apex Court was concerned with the contract for sale of elevators and lifts or works contract, involving sale of goods used in the installation of lifts and elevators. In both the judgments, the Apex Court was not concerned with removal of capital goods under the provisions of Central Excise Act / Rules / CENVAT Credit Rules or even under the Sales Tax Acts.
17. The appellant submits that the primary criteria for inviting excise liability on excisable goods is the clearance / removal of excisable goods from the factory or the place where the goods are manufactured or warehoused. However, in the Sales Tax / VAT laws, the basic criteria is the sale or transfer of title to the goods from one person to another for consideration. Therefore, the above judgments relied upon by the Ld. A.R. are not relevant at all in the present appeals.
18. 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 clause (b) of sub-section (4) of section 4 has defined the term “place of removal” but it has not defined “removal”. The Apex Court has observed that the word “removal” contemplates shifting of a thing from one place to another and contemplates “physical movement of goods from one place to another”. Relevant portion of para -38 from the said judgment is reproduced below:-
“38. the It is submitted on behalf of the appellants that Explanations to Rule 9 and Rule 49 are ultra vires the provision of Clause (b) of subsection (4) of Section 4 of the Act inasmuch as “place of removal” as defined therein, does not contemplate any deemed removal, but a physical and actual removal of the goods from a factory or any other place or premises of production or manufacture or a warehouse etc. This contention is unsound and also does not follow from the definition of “place of removal”. Under the definition “place of removal” may be a factory or any other place or premises of production or manufacture of the excisable goods etc. The Explanations to Rules 9 and 49 do not contain any definition of “place of removal”, but provide that excisable goods produced or manufactured in any place or premises at an intermediate stage and consumed or utilised for the manufacture of another commodity in a continuous process, shall be deemed to have been removed from such place or premises immediately before such consumption or utilisation. Clause (b) of sub-section (4) of Section 4 has defined “place of removal”, but it has not defined „removal‟. There can be no doubt that the word „removal‟ contemplates shifting of a thing from one place to another. In other words, it contemplates physical movement of goods from one place to another.”
Although the Supreme Court was concerned with constitutional validity of section 51 of the Finance Act, 1982 which validated the amendments to rule 9 and 49 of Central Excise Rules, 1944 with retrospective effect. It was pleaded by the petitioners that the expression “place of removal” defined in section 4(4)(b) does not contemplate any deemed removal but a physical and actual removal of goods from the factory or any other place of production or manufacture etc. In this context, the Apex Court observed that the word “removal” (which is the basic event for attracting excise duty) refers to “physical movement of goods” from one place to another.
19. That the dicta laid down by the Apex Court in J.K. Spg. & Wvg. Mills (supra) has been relied upon by the various benches of the CESTAT and the High Courts. A compilation of case law on physical removal / clearance of capital goods has already been filed by the appellant on 04.04.2022.
20. That the appellant relies upon the judgment of Dalmia Cements (Bharat) Ltd. Vs. CCE, Tiruchirapalli – 2008 (224) ELT 484 (Tri-Chen). In this case, the assessee set up power plant in their factory premises and also took CENVAT credit of duty paid on inputs and capital goods received in the factory for the purpose of setting up of power plant. Subsequently, the appellant leased out the entire power plant to M/s Keshav Power Pvt. Ltd. (KPPL) under a lease deed for a period of 10 years. The Department raised duty demand on the assessee on the ground that by leasing out the power plant with ancillary equipments to another company, the assessee removed the capital goods and in terms of rule 3(5) of CCR, 2004, the appellant were liable to pay an amount equal to credit taken on such inputs and capital goods. The Tribunal held that there was no physical removal of capital goods as such from the factory in as much as the capital goods had, by the time the power plant was leased out, lost their separate identity, having become integral part of the power plant. By citing these reasons, the Tribunal held that the provisions of rule 3(5) of CCR, 2004 were not applicable and set aside the impugned order. In para-9, the Tribunal also relied upon the observations of the Supreme Court on the word “removal”.
21. That in appeal, the Hon’ble Madras High Court upheld the Tribunal’s order in the case of Dalmia Cements (Bharat) Ltd. (supra) holding that –
(a) rule 3(5) only speaks about removal of goods under the cover of invoice referred to in rule 9 on inputs or capital goods on which CENVAT credit has been taken;
(b) in the present case, the High Court found that there was no removal of goods under the cover of invoice as provided in rule 9 of CCR, 2004 and there is nothing in rule 3(5) to invoke the deeming fiction as insisted by the adjudicating authority;
(c) the language of rule 3(5) is simple and plain. When the inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, the credit availed in respect of inputs or capital goods shall be paid. This situation has not arisen in the present case as no invoice was issued for removal of goods from the factory premises and the said rule is not applicable in the case of the assessee.
22. That the CBEC has accepted the aforesaid order of the Madras High Court in the case of Dalmia Cements Ltd., (supra) and vide circular No. 1063/2/2018-CX dated 16.02.2018, the Board has conveyed to the field formation that the cases pending in the jurisdiction of Commissionerates on identical matter may be decided accordingly.
23. That it is well settled law that the circulars issued by the Board are binding on the lower authorities (departmental officers) and the authorities are not allowed to take a view different from the Board’s clarification. The adjudicating authority has ignored the Board’s instructions on the subject in question while adjudicating the case.
24. That it is submitted that though in the case of Dalmia Cement, the power plant was leased out and not sold out by the assessee to another company, that does not matter as the crucial test / event to attract rule 3(5A) of CCR, 2004 is the “removal of capital goods”. In the case of leasing of capital goods, the ownership remains with the owner / lessor but the control and possession goes to the lessee. The transfer of ownership is not the criteria under CCR, 2004. Therefore, even if the title to the goods is not transferred but remains with the owner, the duty liability is attracted, if there is removal of goods from one place to another. Since in the appellant’s case, the entire power plant was sold out / transferred by the appellant to M/s SPPL (subsidiary company) on “as is where is basis” without effecting physical removal or clearance of capital goods from the place of their installation, the provisions of rule 3(5)/(5A) are not attracted.
25. High Court Judgments
25.1 That the Chhattisgarh High Court in the case of CCE, Raipur Vs. Bhilai Steel Plant – 2018 (12) GSTL 28 (CG) has held that the concept of physical removal delineated by the Apex Court in the case of J.K. Spg. & Wvg. Mills is squarely applicable to invite excise duty liability on the excisable goods produced in a factory or in other place of production. In this case, the respondent had a captive power plant which was being used for generation of steam and electricity required for the manufacture of steel. As a part of business restructuring plan, the respondent transferred the ownership of captive power plant to M/s Bhilai Electric Supply Co. Ltd. (BESCL). The respondent delivered all the movable and immovable properties including building, works, plant and machinery to M/s BESCL. A lease deed was also executed to effect transfer of leasehold interest in the land / immovable property used for the said captive power plant. As per the Revenue, since the capital goods were transferred by the respondent to M/s BESCL, the goods stood removed and accordingly the respondent was liable to pay an amount equal to duty of excise on the inputs and capital goods installed in the captive power plant on which CENVAT/MODVAT credit was taken. The Tribunal, Principal Bench, New Delhi took note of Apex Court observations of the word “removal” and also the Tribunal’s judgment in the case of L.G. Balakrishnan & Bros Vs. CCE, Trichy and held that the provisions of rule 3(5) of CCR, 2004 are not attracted and affirmed the order of the Commissioner in favour of the respondent/assessee.
25.2 Against the Tribunal’s judgment, Revenue filed appeal before the Chhatisgarh High Court, who were of view that the appeal filed by the Revenue does not deserve to be entertained and as a result the appeal filed by the Revenue was dismissed in limine.
25.3 That the Madras High Court in the case of M/s TVS Srichakra Ltd. Vs. Commissioner of CGST & C. Ex., – 2021-VIL-674-MAD-CE examined the applicability of rule 3(5) of CCR, 2004 in a case where the petitioner was engaged in the manufacture of tyres and tubes sold the capital goods / plant and machinery to another entity but the said capital goods were leased back to the petitioner. The High Court relied upon the Division Bench of the Madras High Court in the case of CCE Vs. CESTAT, Chennai & Dalmia Cements (Bharat) Ltd., – 2015 (323) ELT 290 (Mad.) and further noted that the said judgment has been accepted by the Department as conveyed by the Board vide circular No. 1063/2/2018-CX dated 16.02.2018. In view of this position, the Madras High Court quashed the impugned order and affirmed that in the absence of physical removal of capital goods from one place to another, the provisions of rule 3(5) of CCR, 2004 are not applicable.
25.4 That the Allahabad High Court in the case of Hero Motors Ltd. Vs. CCE, Ghaziabad – 2014 (310) ELT 729 (All.) has examined a case where the assessee-company gave on lease a part of their factory premises to M/s HBSA Pvt. Ltd., who obtained separate registration under Central Excise Rules for manufacture of parts and accessories of motor vehicles and also undertook manufacture of IC engines for Hero Motors Ltd., on job work basis. The Department took a view that the appellant were required to pay excise duty on machinery leased / removed to another company in terms of rule 57S(2)(b) of CER, 1944, after calculating deduction of 2.5% of credit taken, for each quarter of use. The Allahabad High Court held that the capital goods, on which MODVAT credit was taken by the appellant, remained installed in the same premises, which was leased out and continued to be engaged in the manufacture of IC engine, which was further used in the manufacture of two wheelers and there was no removal of capital goods.
26. That the appellant further submits that the provisions of rule 3(5)/(5A) of CCR, 2004 do not suggest constructive or deemed removal of capital goods on account of mere change in the site plan or de-registration of the premises where the capital goods were installed in the power unit. The Tribunal / High Court specifically noted in some of the judgments that consequent to transfer of a particular division / power unit as a whole to the transferee, the assessee-transferor amended their central excise registration alongwith new area demarcation, and the transferee entity also got fresh central excise registration approved. Even by observing these facts, the court held that in the absence of “physical removal” of capital goods from the factory premises of the assessee, the provisions of rule 3(5)/(5A) are not attracted. The appellant also relies on the following judgments:-
(a) G. Balakrishnan & Bros Vs. CCE, Trichy – 2016 (340) ELT 708 (Tri-Chen).
(b) Jamna Auto Industries Ltd. Vs. CCE, Indore – 2001 (130) ELT 181 (Tri-Del) .
(c) Hero Motors Ltd. Vs. CCE, Ghaziabad -2014 (310) ELT 729 (Alld-HC).
27. That w.r.t. interpretation of wordings of an exemption notification, the Hon‟ble Supreme Court in the case of Excon Building Material Mfg. Co. Pvt. Ltd., Vs. CCE, Bombay – 2005 (186) ELT 263 (S.C.) held that where wordings of a notification are clear then plain language of the notification must be given effect to. The Apex Court further affirmed the judicial principle that an interpretation which is not borne out by the plain wordings of the notification cannot be given. It is submitted that rule 3(5)/(5A) of CCR, 2004 require removal of capital goods on which MODVAT/CENVAT credit was availed by the manufacturer in the past. The wordings of the rule require removal or physical shifting of the capital goods from one place to another and the word “removal” should be interpreted in that sense and not in any other manner, such as deemed or constructive removal or transfer of ownership / sale of capital goods from one person to another for consideration.
28. That it is well settled maxim that when the words of a statute are clear, plain or unambiguous i.e., they are reasonably susceptible to only one meaning, the Courts are bound to give effect to that meaning, irrespective of consequences. This maxim is explained at page 55 of the Book on “Principles of Statutory Interpretation” by Justice G.P. Singh (14th Edition) as under:-
“When the words of a statute are clear, plain or unambiguous, i.e. they are reasonably susceptible to only one meaning, the courts are bound to give effect to that meaning irrespective of consequences. The rule stated by TINDAL, C.J. in Sussex Peerage case is in the following form: “If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves do alone in such cases best declare the intent of the lawgiver”. The rule is also stated in another form: „When a language is plain and unambiguous and admits of only one meaning no question of construction of a statute arises, for the Act speaks for itself.”
29. That the adjudicating authority has heavily relied upon judgment of Karnataka High Court in the case of CCE, Belgaum Vs. Associated Cement Company Ltd., – 2009 (236) ELT 240 (Kar.). In this case, the assessee (ACC) sold the entire power unit to M/s Tata Electric Company and so it resulted into transfer of ownership and control to the buyer and this fact was taken by the Karnataka High Court as nothing short of physical removal of the power unit. The appellant submits that the said ruling is not binding on the Tribunal for the following reasons:-
(a) The dicta laid down by the Hon‟ble Apex Court in the case of K. Spg. & Wvg. Mills signifying removal of goods as “physical or actual removal” has not been considered by the Karnataka High Court.
(b) The Karnataka High Court judgment was considered by the CESTAT, Delhi in the case of CCE, Raipur Vs. Bhilai Steel Plant – 2017-VIL-01-CESTAT-DEL-CE., and in spite of that the Tribunal relied upon meaning of “removal” assigned by the Supreme Court in J.K. Spg. & Wvg. Mills Vs. Union of India and held that in the absence of physical removal of goods / power plant, the assessee was not required to pay duty on the capital goods sold by the appellant to Bhilai Electric Supply Co. Ltd. (BESCL).
(c) Even after ACC judgment, the Tribunal at Bangalore in the case of Ultra Tech Cement Ltd. Vs. CCE, Bang-I – 2014 (310) ELT 554 (Tri-Bang) has followed the judgment of Tribunal Chennai in the case of Dalmia Cements (Bharat) Ltd. Vs. CCE – 2008 (224) ELT 484 (Tri-Chen) and in the absence of physical removal of capital goods, the duty demanded by the Department was set aside.
(d) The Karnataka High Court has also dismissed the appeal filed by the Revenue challenging the order of CESTAT, Bangalore in Ultra Tech Cement case on 01.04.2015 as reported in 2015 (321) ELT A-150 (Kar).
(e) Even in ACC case, the assessee-ACC has filed an appeal before the Supreme Court challenging the order of the Karnataka High Court and thus the matter is subjudice.
30. That the appellant submits that in the following judgments relied upon by the Department, have simply relied upon Karnataka High Court judgment in ACC case and the ruling of the Apex Court on the interpretation of the term “removal” has not been considered:-
(a) Pure Drinks Ltd. Vs. Union of India – 2012 (281) ELT 51 (Del)
(b) CCE, Chandigarh Vs. Krypton Outsourcing Ltd. – 2010 (256) ELT 768 (Tri-Del).
(c) K. Paper Mills Vs. CCE, Bhubaneswar-I – 2014 (309) ELT 359 (Tri-Kol).
30. That the provisions of rule 3(5)/(5A) of CCR, 2004 are attracted on removal of capital goods on which the CENVAT credit was availed by the assessee in the past. The capital goods covered by rule 3(5)/(5A) are movable goods other than money and actionable claims. Immovable goods are capital assets and not capital goods. In the appellant‟s case, the plant and machinery such as Boilers, Turbines, Bagasse Carrier, Ash Handling system, Cooling Towers, RO water plant etc. forming part of the power plant sold by the appellant on slump sale are so fixed / embedded to the earth that they could not be moved from one place to another without causing substantial damage to the capital assets. The immovable nature of the capital assets can be appreciated from the Schedule-I of assets forming part of the BTA agreement.
31. That the CBEC under section 37B, vide Order No. 58/1/2002-CX dated 15.01.2002 has also clarified that turnkey projects like steel plants, cement plants, power plants etc. involving supply of large number of components, machineries, equipments, pipes and tubes etc. for their assembly/installation/erection on foundation/civil structure at site are not considered as excisable goods for imposition of excise duty.
32. That in view of the above position, the appellant submits that in any case, the Revenue is not justified in demanding excise duty or reversal of CENVAT credit when the goods forming part of the power plant are immovable property and cease to be capital goods and go outside the purview of rule 3(5)/(5A) of CCR, 2004.
33. That the appellant have also pleaded in the Grounds of Appeal (Ground No. 6) that the entire duty demand for the disputed period January, 2013 is time barred. The SCN was issued on 12.01.2018 whereas the last date of issuing SCN had expired on 10.02.2014. The investigation was also conducted in Oct/Nov, 2015 when the statements of Finance & Accounts officers of the appellant were taken by the DGGI, Lucknow. Since the issue involves interpretation of the term “removal” of capital goods in rule 3(5)/(5A), the appellant could not be charged to evade payment of duty by suppression, collusion, wilful misstatement or suppression of facts, etc. with an intent to evade payment of duty.
34. That in view of the merits of the case and also the duty demand not sustainable on limitation, the appellants are not liable to any penalty u/r 15(2) r/w section 11AC.
35. Appeal No. E/50381/2021-DB
35.1 That this appeal has been filed by the co-appellant Sh. Gurmit Singh Mann, Chairman of M/s Simbhaoli Sugars Ltd. against personal penalty of Rs. 1.0 cr. imposed by the adjudicating authority u/r 26 of CER, 2002.
35.2 That the appellant submits that the co-appellant was working as Chairman of the company. For imposition of personal penalty u/r 26(1), it is mandatory that
(i) the person charged should have been dealing with the excisable goods; and
(ii) the person should have pre-knowledge or reason to believe that the goods dealt by him are liable to confiscation.
It is submitted that both the above ingredients were not fulfilled in the case of co-appellant and as such no personal penalty was warranted against him.
36. Opposing the appeals, ld. Authorised Representative appearing for the Revenue inter alia submits that the appellant have admittedly sold the power plant by way of lumpsum sale on as is where is basis to a new company namely SPPL. In the said new company, appellant have got 51% shareholding and balance 49% is held by the Singapore based company. The entire power plant including steam generation are capital goods, on which cenvat credit was availed, have been transferred by the appellant to the new company for consideration. Further, the land which is owned by the appellant, on which the power plant is situated, have also been leased out to the transferee company, and consequent upon alteration of the boundary of the factory of the appellant (in Central Excise registration), there is a deemed removal and/or nothing short of removal of the power plant. In terms of the BTA, all rights, title in the movable and immovable property comprising the power plant, building, civil structure relating to the power plant as a whole have been sold and transferred to the transferee company.
37. It is further urged that there is existence of contract of transfer for transfer of assets by way of sale, on as is where is basis, the assessee have transferred the standing power plant in the installed condition without dismantling or actual removal. Further urged that the transfer of goods by sale tantamounts to removal, because sale includes transfer of property for consideration. It is further urged that supply of electricity by the transferee company – SPPL to the appellant, subsequent to the transfer is on principal to principal basis. Thus retaining of cenvat credit by appellant, will tantamount to unjust financial accumulation. In the facts of the present case, there is constructive transfer of the power plant to the transferee company. Further, reliance was placed on the ruling of Karnataka High Court in the case of ACC (supra), wherein it was held that ACC have lost its ownership and control over the capital assets and thus the transaction is nothing short of removal of the cenvated assets.
38. As regards limitation, it is further urged that extended period of limitation have been rightly invoked. Under self removal procedure, the onus of assessment and payment of correct payment is on the assessee as per provisions of Rule 6 read with Rule 2(b) of Central Excise Rules, 2002. In the present case, admittedly no invoice was issued for sale/ transfer of power plant. Sale was for consideration, has not been revealed to the Department, monthly return did not reveal any transfer of capital goods. The copy of BTA was not provided to the Department before 27.11.2019, and in case of SSL, Brijnathpur not before 26.08.2015. Despite delineating the premises of the power plant and leasing the same to the transferee company, the appellant did not apply for change of ground plan before the Department. Thus, issue of show cause notice by invoking extended period of limitation is correct.
39. Having considered the rival contentions, we find that the issue is no longer res integra. 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 Rule provides payment of amount equal to excise duty leviable on the transaction value, wherever the amount of cenvat credit was taken, as reduced by depreciation, which is 2.5% for each quarter during which the asset was used (on straight line method). However, if the asset is removed as waste and scrap then duty as applicable on waste and scrap, has to be paid on the transaction value. The Revenue invoked the proviso (extended period) in demanding the amount equal to Central Excise duty on the transaction value, and further imposed penalty being 50% of the duty demanded.
40. We find that the expression “removal” is defined neither in the Central Excise Act / Rules nor in the CCR, 2004. The Ld. Advocate submitted that Hon‟ble Supreme Court in the case of 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. We find that in the context of retrospective amendments in Rule 9 and 49 of erstwhile Central Excise Rules, 1944, the Supreme Court observed that clause (b) of sub-section (4) of section 4 of Central Excise Act, has defined the term “place of removal” but it has not defined “removal”. The Apex Court observed in para 38 that there can be no doubt that the word “removal” contemplates shifting of a thing from one place to another. The Supreme Court went on to say that removal contemplates physical movement of goods from one place to another.
41. After going through the contents of Business Transfer Agreement dated 25.01.2013 between M/s Simbhaoli Sugars Limited (seller) and M/s Simbhaoli Power Pvt Limited (purchaser) for transfer of Chilwaria power business of Simbhaoli Sugars Limited, we find that the appellant-seller agreed to sell, convey, assign and transfer to the purchaser, all the assets and liabilities as defined in Schedule-I and Schedule-II, free from all encumbrances as a going concern and as an inseparable whole, on slump sale basis for an aggregate consideration of Rs. 85 cr. as set out in Clause 3 of the BTA. 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. This is clear from preamble clause (E), clause 2.1.1 and clause 3.1.1 of the BTA.
42. We find that in the erstwhile 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 sale of goods or transfer of ownership of the goods from the seller to the buyer, is not the criteria to cast duty liability on the manufacturer/seller of excisable goods. What is important is the physical removal of excisable goods from the factory of the manufacturer.
43. We note that in the case of CCE, Raipur Vs. Bhilai Steel Plant – 2017-VIL-01-CESTAT-DEL-CE, the respondent under a comprehensive business restructuring plan and to streamline the production / power generation related activities, transferred the ownership of their captive power plant installed within their factory to M/s Bhilai Electric Supply Company Ltd. (BESCL) under an agreement. Under the agreement, the respondent delivered all movable and immovable properties including building, works, plant and machinery to M/s BESCL. A deed of lease was also executed to effect the transfer of leasehold interest in the lands / immovable properties used by the captive power plant. The Department took a view that since the respondent and M/s BESCL are separate legal entities, the inputs and capital goods which were transferred by the respondent to M/s BESCL, stood removed and the respondent was required to pay an amount equal to the duty of excise leviable on the inputs and capital goods installed in the captive power plant on which CENVAT / MODVAT was taken, in terms of rule 3(4) of CCR, 2004. The Department relied on registration of M/s BESCL as a separate factory with the Chief Inspector of Factories, Chhatisgarh, and took a view that the transfer is liable to be termed as removal. The Tribunal took note of observations of the Hon‟ble Supreme Court in the case of J.K. Cotton Spinning & Weaving Mills (supra) wherein the meaning of the word “removal” was examined and interpreted as physical movement of goods from one place to another. The Tribunal held that no amount was required to be paid by the assessee u/r 3(4) on capital goods, as there was no removal of capital goods. The relevant para 14 from the said Tribunal judgment is reproduced below:-
“14. After considering various case laws cited by both the sides we find that the Hon’ble Supreme Court has clearly held that ‘removal’ contemplates physical removal of goods from one place to another. Such a view has also been taken by the majority of the High Court as well as in several Tribunal decisions including in respect of another unit of respondent. Under the circumstances, we find no infirmity in the order passed by the ld. Commissioner who has held that no amount is required to be paid under Rule (4) on capital goods as there has been no removal and dropped the demand of central excise duty.”
44. We further find that the Chhattisgarh High Court has affirmed the Tribunal’s judgment and the Departmental appeal filed against the Tribunal’s order in the case of Bhilai Steel Plant has been dismissed in limine, on the ground that the appeal does not deserve to be entertained by the High Court reported as CCE, Raipur Vs. Bhilai Steel Plant – 2018 (12) GSTL 28 (C.G.). We further note that in the case of L.G. Balakrishnan & Bros. Ltd., Vs. CCE, Trichy – 2016 (340) ELT 708 (Tri-Chen.), the appellant factory had two divisions viz. Chain Division and Rolling Steel Division. Through a Business Transfer Agreement, the appellant transferred the whole Chain Division Business including plant and machinery, raw materials, WIP and finished goods to a new company called M/s Renold Chain India Pvt. Ltd., (RCIPL). Consequent upon such transfer of Chain Division, a dispute arose regarding payment of CENVAT credit availed on inputs and capital goods that were part of Chain Division. Proceedings were initiated against the appellant to recover CENVAT credit on the ground that the inputs and capital goods were no longer in the ownership and control of the appellant, and as such on sale and transfer of Chain Division to a new legal entity, the items are deemed to be cleared attracting the provisions of rule 3(5) of CCR, 2004. By taking note of dicta of the Apex Court in the case of J.K. Spinning & Weaving Mills (supra) about the meaning of the word “removal”, the Tribunal held that the provisions of rule 3(5) of CCR, 2004 were not applicable.
45. We find that the Tribunal has also applied the interpretation of the term “removal” as given by the Apex Court in the case of J.K. Spg. & Wvg. Mills in the transactions involving leasing of plant and machinery as a whole. In the case of Dalmia Cements (Bharat) Ltd., Vs. CCE, Tiruchirapalli – 2008 (224) ELT 484 (Tri-Chen.), the assessee set up power plant in their factory premises and also took CENVAT credit of duty paid on inputs and capital goods received in the factory for the purpose of setting up of power plant. Subsequently, the assessee leased out the entire power plant to another entity M/s Keshav Power Pvt. Ltd. (KPPL) under a lease deed for a period of 10 years. The Department raised duty demand on the assessee on the ground that by leasing out the power plant with ancillary equipments to another entity, the assessee removed the capital goods and in terms of rule 3(5) of CCR, 2004, the assessee was liable to pay an amount equal to credit taken on such inputs and capital goods. The Tribunal held that there was no physical removal of capital goods as such from the factory in as much as the capital goods had, by the time the power plant was leased out, lost their separate identity, having become integral part of the power plant. By citing these reasons, the Tribunal held that the provisions of rule 3(5) of CCR, 2004 were not applicable and set aside the impugned order. In appeal, the Madras High Court in CCE, Tiruchirapalli Vs. CESTAT, Chennai – 2015 (323) ELT 290 (Mad.) upheld the Tribunal‟s order holding that rule 3(5) only speaks about removal of goods under the cover of invoice referred to in rule 9 on inputs or capital goods on which CENVAT credit has been taken. The High Court found that there was no removal of goods under the cover of invoice as provided in rule 9 of CCR, 2004 and there was nothing in rule 3(5) to invoke the deeming fiction of removal, as applied by the adjudicating authority.
46. We find that CBEC has accepted the above said order of the Madras High Court in the case of Dalmia Cements Ltd., (supra) and vide circular No. 1063/2/2018-CX dated 16.02.2018, the Board has conveyed to the field formations that the cases pending within their jurisdiction on identical matter may be decided accordingly. It appears that the Board has accepted the interpretation of the word “removal” as explained by the Supreme Court in the case of J.K. Spg. & Wvg. Mills (supra) and with a view to reduce litigations, have issued the instructions for adjudication of similar issues.
47. A contention was raised by the Ld. AR that post transfer of power plant, the boundary/premises of the appellant were altered and consequent upon change in the site plan of the appellant, the capital goods were effectively removed from the premises of the appellant and got entered in the premises of the transferee-M/s Simbhaoli Power (P) Ltd., and such transfer vide BTA was nothing short of physical removal of cenvated capital goods inviting the provisions of rule 3(5A) of CCR, 2004. Ld. Counsel on behalf of the appellant argued that similar objection has been raised by the Department in other cases and such objections were overruled by the Tribunal and even by the High Courts. The Allahabad High Court in the case of Hero Motors Ltd., Vs. CCE, Ghaziabad – 2014 (310) ELT 729 (Alld), where the assessee transferred the business of manufacture of IC engines to M/s HBSA Pvt. Ltd. on lease basis. The manufacturing facility of HBSA was demarcated within the factory premises of the assessee and was shown accordingly in the layout plan filed by HBSA for obtaining central excise registration. The plan forms part of the registration certificate granted to the HBSA. The High Court observed that notwithstanding the change in the layout plan, the plant and machinery remained installed at the same premises and were never removed from that premises despite the fact that the separate registration certificate was obtained by HBSA. The High Court held that as the capital goods remained installed in the same premises and despite the premises were transferred on lease, the capital goods even if they were deemed to be installed in the premises of HBSA, rule 57S of erstwhile CER, 1944, would not be attracted. The provisions of clause (b) and (c) of rule 57S(2) are reproduced below:-
“(b) where capital goods are removed after being used in the factory for home consumption on payment of duty of excise or for export under rebate on payment of duty of excise, such duty of excise shall be calculated by allowing deduction of 2.5 percent of credit taken for each quarter of a year of use or fraction thereof, from the date of availing credit under rule 57Q; and
(c) where capital goods are sold as waste and scrap, the manufacturer shall pay the duty leviable on such waste and scrap.”
On perusal of clause (b) and (c) of rule 57S(2), it is clear that the said clauses are similar to rule 3(5A) of CCR, 2004. Both these rules talk of removal of capital goods after being used in the factory. Thus the views expressed by the Allahabad High Court w.r.t. erstwhile rule 57S(2) of CER, 1944 are equally applicable in the context of rule 3(5A) of CCR, 2004.
48. We find that this Tribunal has considered similar objection from the Department regarding change in the ground plan followed by amendment in the central excise registration of the transferor and new central excise registration obtained by the transferee entity:-
(d) G. Balakrishnan & Bros Vs. CCE, Trichy – 2016 (340) ELT 708 (Tri-Chen)
(e) Jamna Auto Industries Ltd. Vs. CCE, Indore – 2001 (130) ELT 181 (Tri-Del)
However, the Tribunal has considered the observations to the expression “removal” placed by the Supreme Court in the case of J.K. Spg. & Wvg. Mills (supra) and other judgments passed by the Tribunal in similar situations and finally held that the provisions of rule 3(5)/(5A) of CCR, 2004 were not applicable to transfer of business division in toto including plant, machinery, raw materials, work-in- progress and finished goods to a new company as a going concern.
49. The Ld. AR has heavily relied upon the judgment of Karnataka High Court in the case of CCE, Belgaum Vs. Associated Cement Co. Ltd., – 2009 (236) ELT 240 (Kar.) in which case the High Court took a view that though there had been no physical removal of power unit, the transaction of sale of running power unit by the assessee – company to M/s Tata Electric Company would certainly amounts to nothing short of physical removal of the power unit of the assessee, in respect whereof MODVAT credit was availed by the assessee so as to attract the provisions of rule 57AB(1)(b) of Central Excise Rules, 1944. We find that before the High Court, the observations made by the Supreme Court in the case of J.K. Spg. Mills as to the expression “removal” were not placed for consideration. Secondly, the assessee – company M/s ACC has filed an appeal before the Supreme Court, which has admitted the appeal and thus the matter is sub judice. Further, after the decision in the ACC case, the Karnataka High Court has re-examined the issue once again in the case of Commissioner Vs. Ultra Tech Cement Ltd.,- 2015 (321) ELT A150 (Kar.) and dismissed the appeal filed by the Revenue, affirming the decision of this Tribunal reported in 2014 (310) ELT 554 (Tri-Bang). For these reasons, we do not wish to follow the old judgment of Karnataka High Court in the case of ACC.
50. The Ld. AR has also cited the following judgments in the synopsis filed by him:-
(a) Pure Drinks Ltd. Vs. Union of India – 2012 (281) ELT 51 (Del)
(b) CCE, Chandigarh-I Vs. Krypton Outsourcing Ltd. – 2010 (256) ELT 768 (Tri-Del)
(c) K. Papers Ltd. Vs. CCE, Bhubaneswar-I – 2014 (309) ELT 359 (Tri-Kol)
We find that all the above judgments were passed in favour of the Revenue by relying upon the Karnataka High Court judgment in the case of ACC Ltd. Since we have decided not to follow the said ACC judgment for the reasons given above, we do not find any force in the judgments cited by the Ld. AR.
51. In view of the above analysis, we hold 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. We further hold that no penalty is imposable under Rule 26 of CER, 2002 on the Chairman of the appellant company.
52. In view of our aforementioned findings and observations, particularly in view of the ruling of Hon‟ble Madras High Court in the case of Dalmia Cement (supra), which have been accepted by the CBIC as clarified in the Circular No. 1063/2/2018-CX, we hold that in the facts and circumstances of the present case, there is no removal of capital assets/power plant. As There have been no removal, the provision of Rule 3(5A) of Cenvat Credit Rules are not attracted. Accordingly, we allow these appeals and set aside the impugned order. The appellant shall be entitled to consequential benefits in accordance with law.
53. In the result, all the appeals are allowed.
(Pronounced on 20/10/ 2022).
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