Appeal No. E/60514/2016, [Arising out of Order-in-Original No. 26/MV/CCE/2016 dated 22.06.2016 passed by the Principal Commissioner of Customs, Central Excise Gurgaon-II.]. Case: Honda Motorcycle And Scooter India Private Ltd. Vs C.C.E. & S.T., Gurgaon-II. CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)

Case NumberAppeal No. E/60514/2016, [Arising out of Order-in-Original No. 26/MV/CCE/2016 dated 22.06.2016 passed by the Principal Commissioner of Customs, Central Excise Gurgaon-II.]
CounselFor Appellant: Shri Puneet Bansal & Prateek Jain Advocates and For Respondents: Shri Vijay Gupta, A.R.
JudgesMr. Devender Singh, Member (Technical)
IssueCentral Excise Tariff
Judgement DateMay 15, 2017
CourtCEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)

Order:

Devender Singh, (Chandigarh)

  1. The appellant is engaged in manufacture of two wheelers falling under chapter 87 of the Central Excise Tariff. They availed Cenvat Credit on partially used capital goods. Department felt that they wrongly calculated the duty/payment on the basis of depreciation at the rate of 2.5 percent for each quarter for the entire period instead of 50% depreciation of credit availed in the first year and the balance 50% percent on the credit availed in the subsequent year. A demand of Rs. 2,47,824/- for the period 2011-2012 to August 2015 was raised along with interest and proposal for imposition of penalty. Another demand of Rs. 1,37,817/- was raised on the ground that they had exported 16 numbers of Motorcycles and Scooters free of cost (FOC) basis to their counterpart in Japan and they did not realize any foreign exchange in respect of the said export till date. The show cause notice for these demands and three other demands was issued on 06.10.2015. The matter was adjudicated. Both the above mentioned demands of Rs. 2,47,874/- and Rs. 1,37,817/- were confirmed along with interest and imposition of penalty of equivalent amount. The remaining three demands have been dropped by the adjudicating authority.

  2. Ld. Advocate submits at the outset that they are contesting the demands confirmed at serial number (ii) and (v) of the order of the adjudicating authority. For the first demand of Rs. 2,47,824/-, Ld. Advocate invites attention to Rule 3 (5)(A)(b) of Cenvat Credit Rules, 2004 and contends that the percentage of depreciation is fixed in terms of said Rule for each quarter. Hence, the Commissioner adopting the criteria of 50% for the first year depreciation and balance 50% for subsequent year is contrary to the rules. He also stated that the Commissioner has given no finding on Paragraph D-5 and D-7 of their pleadings in the reply to show cause notice. Besides, there is no finding on extended period and penalty.

  3. With respect to the second demand, the Ld. Advocate states that the adjudicating authority has erred in placing reliance on the RBI Circular, which was not relevant. Even in term of said circular, they had complied with the circular. In this context, he referred to the destruction certificate issued by Honda R&D Company, Japan certifying the destruction of 20 Honda Motorcycles imported on invoices mentioned therein. He also referred to Rule 19 (1) and Rule 19 (3) of the Central Excise Rules, 2002 and...

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