C.E.A. No. 54 of 2008 [ 1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Central Excise Appeal No. 54 of 2008 Date of decision: 19.8.2008 M/s Raghav Alloys (P) Ltd., Mandigobindgarh. .. Appellant. v. Commissioner of Central Excise, Chandigarh. .. Respondent. CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Jagmohan Bansal, Advocate for the appellant. Mr. Gurpreet Singh, Advocate for the respondent. .. Rajesh Bindal J. The appellant (hereinafter described as `the assessee') has filed the present appeal before this Court under Section 35G of the Central Excise Act, 1944 (for short, `the Act') against the order dated 20.11.2007, passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (for short, `the Tribunal') in Excise Appeal No.3891 of 2005-SM, raising the following substantial questions of law: “(i) Whether Rule 3(4) of Cenvat Credit Rules, 2002 is applicable on capital goods removed after use ? (ii) Whether the impugned order passed by Tribunal is perverse and against the basic scheme of the Cenvat ? (iii) Whether appellant is liable to penalty when no mens rea is involved. ?” Learned counsel for the assessee submitted that the assessee in the present case is engaged in the manufacture of non-alloy steel ingots falling under Chapter Heading 72 of the First Schedule to the Central Excise Tariff Act, 1985. In 1994, the assessee purchased one induction furnace and in terms of the Central Excise Rules, 1944, the assessee availed modvat credit of the duty paid on purchase thereof. The said furnace was used by the assessee till 2003. Thereafter, the same was knocked down and sold as C.E.A. No. 54 of 2008 [ 2] scrap vide Invoice No. 153 dated 28.5.2003. On the bill so raised, a sum of Rs. 32,000/- was paid as duty. On 2.6.2004, the assessee was issued a notice to show cause as to why duty of Rs. 98,000/- should not be recovered from him in terms of Rule 12 of the CENVAT Credit Rules, 2002 (for short, `the Rules') read with Section 11A of the Act. This was for the reason that the assessee initially had availed of modvat credit of Rs. 1,30,000/- at the time of purchase of the induction furnace as capital goods in the year 1994 and finally when the same was sold in 2003 as scrap, only a sum of Rs. 32,000/- was paid as duty and difference was sought to be recovered from the assessee. The adjudicating authority did not agree with the contention raised by learned counsel for the assessee to the effect that no duty as such was payable as the capital goods had not been disposed of as such, rather the same were used by the assessee for a period of about 9/10 years and finally sold as scrap. The demand of Rs. 98,000/- was confirmed against the assessee. In appeal before the Commissioner (Appeals), the assessee succeeded and the order passed by the adjudicating authority was set aside. The Revenue went in appeal before the Tribunal, where reliance was placed upon Rule 3(4) of the Rules. On the date when the case was taken up for hearing, due to unavoidable circumstances, the assessee could not be represented and the Tribunal in the absence of proper assistance accepted the appeal of the Revenue and set aside the order passed by the Commissioner (Appeals). Learned counsel for the assessee submitted that the ground on which demand has been raised against the assessee is untenable. A bare perusal of Rule 3(4) of the Rules shows that no duty could be charged from the assessee for the reason that the capital goods on which modvat credit had been availed of by him was not removed as such from the factory. Rather, the same was used for a period of about 9/10 years and thereafter disposed of as scrap. He further submitted that in fact, in a number of earlier orders passed by various Benches of the Tribunal, the issue on merits was decided in favour of the assessees therein. Reference has been made to Salona Cotspin Ltd. v. Commissioner of Central Excise, Salem, 2006 (201) E.L.T. 592, The Commissioner of Central Excise, Belapur v. Reforms Machine Tools Ltd., 2007-TIOL-1572-CESTAT-MUM and The C.E.A. No. 54 of 2008 [ 3] Commissioner of Central Excise, Cochin v. M/s Teejan Foods (P) Ltd., 2008-TIOL-588-CESTAT-BANG. He further submitted that even in the absence of counsel for the assessee in case the Tribunal was to take a view different than the view taken by it in other cases, the matter was required to be referred to a larger Bench. Learned counsel for the Revenue could not dispute the fact that in other cases the Tribunal had taken a view favourable to the assessees therein. However, he submitted that in the absence of assistance by the counsel for the assessee before it, the Tribunal did not have any option but to decide the appeal on the basis of the material available before it. Having heard learned counsel for the parties and also considering the fact that the Tribunal in a number of cases has taken a view, on the legal issue involved in the present case, in favour of the assessees therein and in the present case, the appeal of the Revenue was accepted for the reason that the assessee remained unrepresented before the Tribunal, we find that ends of justice in the present case would be met in case the matter is remitted back to the Tribunal to consider the appeal filed by the Revenue afresh after hearing both the parties. For the reasons mentioned above, order dated 20.11.2007 passed by the Tribunal is set aside. The Tribunal is directed to hear and decide the appeal filed by the Revenue afresh after giving notice to the parties. The appeal is disposed of accordingly. (Rajesh Bindal) Judge (Hemant Gupta) Judge 19.8.2008 mk