2013 (4) TMI 54 - AT - Central Excise

Transfer of Cenvat / MODVAT credit - Rule 10 - the appellant denied of Cenvat credit on the ground that as the raw material does not get transferred, the appellant is not entitled to the transfer of Modvat credit - Held that - it is not the Revenue s case that the raw material belonging to the earlier manufacturing unit M/s. Auto Tube has been cleared by them to some outside person. Presuming that there was no stock of raw material lying with M/s. Auto Tube even then the benefit of transfer of Cenvat credit would be available to the appellant. The Hon ble High Court in the case of Commissioner of Central Excise, Pondicherry v. CESTAT 2009 (240) E.L.T. 367 has held that even when there was no stock of input as such or in progress having put to use, the transfer under the provisions of Rule 10 of Cenvat Credit Rules is permissible. - Credit allowed - Decided in favor of assessee.

Summary

Issues:
Transfer of Cenvat credit under Rule 10 of Central Excise Rules.

Analysis:
The case involves a dispute regarding the transfer of Cenvat credit from the previous owner's account to the new owner's account under Rule 10 of the Central Excise Rules. The appellant, after acquiring a new registration, sought to transfer the balance of stock and amounts in various accounts from the previous unit to the new one. Initially, the Assistant Commissioner allowed the transfer of capital goods only, but the appellant insisted that raw material and Cenvat credit related to the previous unit were also transferred under Rule 10.

Subsequently, a Show Cause Notice (SCN) was issued proposing the denial of Cenvat credit based on the argument that since the raw material was not transferred, the appellant was not entitled to the Modvat credit transfer. The original adjudicating authority and the Commissioner (Appeals) upheld this denial.

However, the Tribunal analyzed the correspondence between the appellant and the Revenue and found that the appellant consistently asserted the transfer of the entire stock of raw material from the previous unit to the new one. The Tribunal noted that Rule 10 allows the transfer of Cenvat credit if the stock of inputs is transferred along with the factory. Since the appellant had requested the transfer of the entire stock of inputs, and there was no evidence that the raw material was cleared outside by the previous owner, the Tribunal concluded that there were no grounds to deny the transfer of Cenvat credit.

Moreover, the Tribunal referred to a decision by the Hon'ble High Court of Madras, which held that even if there was no stock of input "as such" or "in progress" transferred, the transfer under Rule 10 of the Cenvat Credit Rules is permissible. Therefore, even if there was no simultaneous transfer of input to the new factory premises, and considering that the raw material was not cleared outside by the previous owner, the Tribunal allowed the transfer of credit based on the High Court's decision.

In conclusion, the Tribunal set aside the impugned order, allowed the appeal, and granted consequential relief to the appellant. The stay petition was also disposed of in favor of the appellant.