2007 (9) TMI 496 - AT - Central Excise

Cenvat/Modvat credit - Transfer of credit - Shifting of factory - Rule 8 of CCR - Held that - The Rule does not require that the assessee can transfer credit corresponding only to the quantum of inputs transferred to a new factory. The rule permits the assessee to transfer the available credit along with inputs and capital goods in stock at a factory to the factory at a new location - In the instant case, the finding of the authorities is to the effect that the appellants had satisfactorily accounted for the inputs and capital goods and they had transferred these materials along with the credit balance available. This was in accordance with law - appeal allowed - decided in favor of appellant.

Summary

Issues: Application for waiver of pre-deposit, interpretation of Rule 8 of Cenvat Credit Rules, 2002.

Analysis:
1. Application for Waiver of Pre-Deposit: The case involved an application by M/s. Sunpack to waive pre-deposit to heat its appeal against the Commissioner (Appeals) order. The Commissioner had confirmed a demand of Rs. 3,89,970/- as excess credit compared to the credit corresponding to the inputs transferred by the appellants when the factory was shifted to a new premises. The Joint Commissioner had dropped the recovery proposal as the assessee had accounted for the credit and inputs transferred to the new premises, fulfilling conditions under Cenvat Credit Rules, 2002.

2. Interpretation of Rule 8 of Cenvat Credit Rules, 2002: The Tribunal analyzed Rule 8, which deals with the transfer of credit when a manufacturer shifts the factory to a new site. The rule allows the transfer of unutilized Cenvat credit along with inputs and capital goods to the new factory. The authorities found that the appellants had accounted for inputs and capital goods to the satisfaction of the Commissioner and transferred them along with the available credit balance to the new location. The Tribunal concluded that the appellants had complied with the law by transferring the credit along with inputs and capital goods, and thus, the impugned order demanding excess credit was not sustainable.

In the final decision, the Tribunal dismissed the stay application and proceeded with the main appeal for final disposal. After considering the submissions and case records, the Tribunal found that the appellants had fulfilled the requirements of Rule 8 by transferring the credit along with inputs and capital goods to the new factory. Therefore, the impugned order was set aside, and the appeal was allowed.