Cenvat Credit
In the CESTAT, Chennai Bench
Shree Rama Multi – Tech Ltd.
v.
Commissioner of Central Excise
P.G. CHACKO, JUDICIAL MEMBER
AND P. KARTHIKEYAN, TECHNICAL MEMBER
FINAL ORDER NO. 818/2007
MISC. ORDER NO. 584/2007
APPLICATION NO. E/EH/436 OF 2007
APPEAL NO. E/88 OF 2007
July 3, 2007
Rule 10 of the Cenvat Credit
Rules, 2004 – Transfer of cenvat credit – Assessee shifted its plant and
machinery from its one unit ‘P’ to its unit ‘G’ after obtaining the requisite
permission from departmental authorities – There was no stock of inputs as such
or in process at time of this shifting of factory but there was unutilized
input-duty credit in relevant CENVAT account of assessee’s P’s Unit – Assessee
sought to transfer such credit to ‘G’ Unit - Revenue denied transfer of such
credit on ground that such transfer of credit was not accompanied by
physical transfer of inputs as such or
in process - Whether since physical transfer of inputs to new site was not necessary
for transfer of unutilized credit to new unit, revenue ought to have allowed
transfer of Cenvat credit in question to sister unit of assessee – Held, yes
[Para 3]
The assessee’s unit at ‘P’ was wound-up and the plant and machinery were transferred to its ‘G’ unit after taking permission from the departmental authorities. The assessee requested for transfer of unutilized cenvat credit on inputs to the cenvat account of its sister unit. The adjudicating authority denied the same. On appeal, the Commissioner (Appeals) sustained the order of the adjudicating authority.
On appeal:
In the instant case, it was not in dispute that the assessee shifted its plant and machinery from ‘P’ to ‘G’ after obtaining the requisite permission from the departmental authorities. It was again, not in dispute that there was no stock of inputs as such or in process at the time of that shifting of factory. However, at that time, there was unutilized input-duty credit to the extent of over Rs. 33 lakh in the relevant cenvat account of the assessee’s ‘P’ Unit. It was this credit which was sought to be transferred to the ‘G’ Unit. The revenue’s case was that such transfer of credit must be accompanied by physical transfer of inputs as such or in process. The assessee had contested that stand of the revenue. In that connection, the assessee had relied on the decision of the Tribunal in CCE v. Smithkline Beecham Consumer Health Care Ltd. – 2007 (209) ELT 96 (Chennai), wherein, it was held that physical transfer of inputs to the new site was not necessary for transfer of unutililzed credit to the new unit. There was no case for the revenue that the inputs on which the above credit had been availed were not duly accounted for by the assessee to the satisfaction of the jurisdictional adjudicating authority at ‘P’. Revenue’s only case was that there was no transfer of inputs as such or inputs in process along with capital goods to the ‘G’ Unit. That argument belied logic inasmuch as it would mean that transfer of a factory from one site to another is not permitted in law if inputs have been wholly utilized in the manufacture of final products. The argument advanced on behalf of the department was to the effect that either input as such in stock or input in process must be physically available and the same should be transferred along with capital goods in connection with shifting of factory so as to claim transfer of unutilized cenvat credit to the new unit. However, in similar case of Smithkline Beecham Consumer Health Care Ltd. (supra) the decision was in favour of the assessee. The lower authorities ought to have allowed transfer of the cenvat credit in question to the sister unit of the assessee. [Para 3]
The assessee had also claimed interest on the amount of cenvat credit. But no such claim had been raised before any of the lower authorities. There was no claim of such relief in the appeal, hence, the claim for interest could be entertained. [Para 4]
Therefore, the impugned order was to be set aside. [Para 5]