2005 (6) TMI 490 - AT - Central Excise

Summary

Issues:
- Denial of Modvat credit
- Interpretation of Rule 8 of the Cenvat Credit Rules
- Effect of subsequent undertaking on liability

Analysis:
The case involved an appeal against the denial of Modvat credit by the Commissioner (Appeals) and the imposition of a penalty. The appellants had purchased a unit without any liability and subsequently sought to claim the unutilized Cenvat credit from the previous manufacturer. The Revenue contended that the unit was taken over without any liability as per the sale deed, and any subsequent undertaking did not amend this fact.

Upon analysis, it was found that Rule 8 of the Cenvat Credit Rules allows the new manufacturer to take credit if they assume the liability of the unit upon sale. In this case, the possession was taken without any previous liability, as per the transfer deed. Although the appellants later provided an undertaking to the Superintendent of Central Excise regarding liability, it was noted that the deed of transfer remained unchanged, stating no liability.

The Tribunal concluded that since the unit was purchased without any liability as per the transfer deed, the subsequent undertaking did not alter this fact. Therefore, the denial of Cenvat credit was upheld. However, considering the circumstances, the penalty imposed on the appellants was set aside. The appeal was dismissed based on the lack of amendment to the deed of transfer, which remained unchanged regarding liability.