2015 (6) TMI 989 - Commissioner - Central Excise

Transfer of the Cenvat credit - eligibility of benefit of Rule 10 of Cenvat Credit Rules, 2004 - Held that - Rule 10(3) of the Cenvat Credit Rules, 2004 stipulates the transfer of the Cenvat credit under sub-rules (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central Excise In the instant case all the stock of finished, semi-finished goods including plants and machinery was destroyed in the fire incidence and hence question of stock transfer does not arise. Further find that the appellant had intimated to the department regarding transfer of Cenvat credit time and again and had requested for regularization of the same as per the provisions of Rule 10 of the Cenvat Credit Rules, 2004.

Summary

Issues involved:
Appeal against disallowance of Cenvat credit under Rule 14 of Cenvat Credit Rules, 2004, transfer of Cenvat credit under Rule 10, and imposition of penalty under Rule 15 of Cenvat Credit Rules, 2004 and Rule 25 of Central Excise Rules, 2002.

Analysis:
1. The appellant, engaged in manufacturing printed ink, faced proceedings due to a fire incident destroying their factory. They transferred unutilized Cenvat credit to a new factory. The department issued a show cause notice for recovery of irregular Cenvat credit.
2. The adjudicating authority disallowed the Cenvat credit, imposed interest and penalty. The appellant appealed, contending the benefit of Rule 10 of Cenvat Credit Rules, 2004.
3. Rule 10 allows transfer of Cenvat credit if a factory is shifted due to specific reasons, subject to certain conditions. The appellant's original factory was destroyed in a fire, and they reversed the Cenvat credit involved in the destroyed goods.
4. The department objected to transferring credit to a new unit while the original unit still existed. However, Rule 10(3) does not prohibit such transfers if stock and capital goods are destroyed, as in this case.
5. The Range Officer confirmed the destruction of all stock and machinery in the fire incident. The appellant repeatedly informed the department about the credit transfer and sought regularization under Rule 10.
6. Considering the circumstances and compliance with Rule 10 provisions, the appeal was allowed, granting relief to the appellant.