2018 (4) TMI 1046 – MADRAS HIGH COURT – 2018 (15) G. S. T. L. 182 (Mad.) – CENVAT credit – Reversal of credit on capital goods – lease back of goods – contemporaneous leasing back through rental agreement – whether the leasing back amounts to removal of capital goods from the factory premises of the petitioner or not? – Rule 3(5) of the CCR – Held that: – In any adjudicatory process, the authority has a duty to deal with every material and relevant contention raised by the disputant. This alone will ensure that decision-making occurs thoroughly and lawfully and that the decision-maker's mind is focussed. The decision-maker needs to be disciplined in addressing questions, nor just arriving at answers.
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The stand of the writ petitioner is that the revenue has not questioned the legality of the sale dated 22.03.2013 and the rental agreement. In the counter affidavit it has been stated that the revenue has not accepted the transaction as genuine at any point of time. If according to
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ited on 22.03.2013. The said capital goods were leased back to the petitioner with effect from 01.04.2013. According the petitioner, the goods were sold to OPC Limited only for financial accommodation and in view of the contemporaneous leasing back through rental agreement, there was no removal of capital goods from the factory premises of the petitioner and that therefore Rule 3(5) of the Cenvat Credit Rules is not attracted. 2.However, the respondent herein after scrutinizing the annual report of the assessee for the year 2012-13 during audit accounts conducted by the officers attached to Internal Audit of Madurai Commissionarate during Feb 2014 noted that deemed removal/delivery of the said capital goods to OPC Assets Solutions Pvt. Ltd was made on 22.03.2013 itself and the delivery of the goods back to the petitioner herein took place only on 01.04.2013. It appeared that the petitioner herein is either liable to reverse the credit proportionate to the actual cenvat credit taken to
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oner, in the facts and circumstances of this case, the petitioner ought not to be non suited on that ground. 2.The impugned order is vitiated for failure to advert to the defence projected by the petitioner herein. 3.The whole basis of the show cause notice as well as the impugned order is unsustainable in law. 6.Per contra, the learned standing counsel appearing for the respondents reiterated the stand taken in the counter affidavit. 7.At the very outset, this Court must notice the prayer made in the writ petition. The petitioner seeks quashing of the impugned order on the ground of non consideration of the submissions made by them in the reply and during personal hearing. Therefore, all that the petitioner seeks is only a remand to the file of the respondent for fresh consideration in accordance with law. Since this is the prayer sought for the by the petitioner himself, this Court would not be justified in venturing into a discussion on the merits of the matter. If this Court comes
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les, 2004 and the decision of the Allahabad High Court in (Hero Motors Ltd. v. Commissioner of Central Excise, Ghaziabad (2014 (310) E.L.T 729), held as follows : 16.On a plain reading of Rule 3 (5) of the Cenvat Credit Rules, 2004, we find that Rule 3 (5) only speaks about the removal of goods under cover of invoice referred to in Rule 9 on inputs or capital goods on which cenvat credit has been taken and if such goods are removed as such from the factory or premises of the provider of output service, the manufacturer of the final products or provider of output service, shall be liable to pay an amount equal to the credit availed in respect of such inputs or capital goods. 17.In this case, we find there is no removal of goods under cover of invoice as provided under Rule 9 of the Cenvat Credit Rules, 2004 and there is nothing in Rule 3 (5) of the Cenvat Credit Rules, 2004 to invoke the deeming fiction as insisted by the adjudicating authority. The language of Rule 3 (5) is plain and s
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it had been specifically pleaded that the aforesaid decision of the Division Bench of this Court was referred to not only in the written submissions but also reiterated at the time of personal hearing. This factual assertion is not controverted in the counter affidavit filed by the respondent. This Court went through the impugned order in its entirety. The defence projected by the petitioner herein based on 2015 323 ELT 290(Commissioner of Central Excise, Trichy vs. CESTAT) has not been referred to or considered. On this sole ground, the impugned order is liable to be quashed. 11.In any adjudicatory process, the authority has a duty to deal with every material and relevant contention raised by the disputant. This alone will ensure that decision-making occurs thoroughly and lawfully and that the decision-maker's mind is focussed. The decision-maker needs to be disciplined in addressing questions, nor just arriving at answers (Administrative Law by Mark Elliott and Jason N.E.Varuhas
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other aspect of the matter. The stand of the writ petitioner is that the revenue has not questioned the legality of the sale dated 22.03.2013 and the rental agreement. In the counter affidavit it has been stated that the revenue has not accepted the transaction as genuine at any point of time. If according to the respondent, the sale dated 22.03.2013 is not genuine, the question of deemed removal of the goods will not even arise. This Court is of the view that while the assessee can argue in the alternative, the department cannot. The respondent must take a clear and definite stand. For all these reasons, the order impugned in the writ petition is quashed. The matter is remitted to the file of the respondent for fresh consideration in accordance with law. The respondent shall afford an opportunity of personal hearing to the petitioner. It is necessary to sound a note of caution here. The respondent no doubt has filed a counter affidavit seeking to sustain the order impugned in this wr
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