2013 (12) TMI 1337 - AT - Central Excise

Transfer of the unutilized and accumulated cenvat credit - Inputs as well as the capital goods lying in the records Waiver of Pre-deposit Held that - As per Rule 10 of Cenvat Credit Rules, 2004 is a beneficial piece of legislation allowing transfer of unutilized credit to the new assessee to whom the business stands transferred - The present assessee has undoubtedly been given central excise licence and has taken over all the liability of M/s Mound Trading Co. Pvt. Ltd. - all the assets in the shape of credit of the previous manufacturer have to be transferred to the appellant - The objection raised by Revenue on technical ground cannot be appreciated in the absence of any dispute of availability of credit to the appellant thus, pre-deposits waived till the disposal Stay granted.

Summary

Issues involved: Transfer of unutilized and accumulated cenvat credit of duty in respect of inputs and capital goods to a new assessee, denial of credit by the original adjudicating authority, rejection of appeal by the Commissioner (Appeals), interpretation of Rule 10 of Cenvat Credit Rules, 2004.

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI, delivered by Ms. Archana Wadhwa, addresses the issue of transferring unutilized and accumulated cenvat credit of duty from M/s Mound Trading Co. to a new assessee, M/s Parle Products Ltd. The appellant sought to dispense with the condition of pre-deposit of duty and interest amounting to Rs.23,04,174. The appellant took over the manufacturing activities from M/s Mound Trading Co. Pvt. Ltd., using the same factory and capital goods supplied by Parle Products. The appellant obtained Central Excise registration and began paying duty on the final product. The dispute centered around the transfer of unutilized credit of duty on inputs and capital goods as of 5.8.2008 from M/s Mound Trading Co. to the appellant.

The original adjudicating authority denied the credit transfer on the grounds of ownership of the factory and capital goods, while the Commissioner (Appeals) rejected the appeal based on the show cause notice. The Tribunal, upon examining Rule 10 of the Cenvat Credit Rules, 2004, noted that the rule allows for the transfer of unutilized credit to a new assessee when the business is transferred. The Tribunal emphasized that the new assessee, having taken over all liabilities of the previous manufacturer, is entitled to the assets in the form of credit. The Tribunal found the objection raised by the Revenue on technical grounds unjustified, especially in the absence of any dispute regarding the availability of credit to the appellant.

In light of the above analysis, the Tribunal deemed it appropriate to dispense with the condition of pre-deposit of duty and interest, staying the recovery of the same during the pendency of the appeal. The judgment underscores the importance of following the provisions of the Cenvat Credit Rules, 2004, in facilitating the smooth transfer of credits in cases of business succession, ensuring fairness and continuity in excise duty liabilities and benefits.