2012 (8) TMI 862 - AT - Central Excise

Stay application - Held that - application for transfer of unutilized Cenvat credit was given after surrender of registration of the factories. Where the registration of a factory is surrendered, prima facie, no factory as defined under the Central Excise Act subsists to be transferred. Sub-rule (1) of Rule 10 ibid contemplates transfer of unutilized Cenvat credit upon shifting of factory to another site or transfer of its ownership to another person. Sub-rule (3) states that such transfer of Cenvat credit shall be allowed only if the stock of the inputs as such or the inputs in process or the capital goods is also transferred along with the factory to the new site or along with the transfer of ownership of the factory to another person - Stay granted.

Summary

Issues:
- Stay of operation of the impugned order regarding transfer of unutilized Cenvat credit from closed manufacturing units to a surviving unit.

Analysis:
1. The Department filed an application seeking a stay of the impugned order related to the transfer of unutilized Cenvat credit from closed manufacturing units to a surviving unit. The respondent did not appear despite notice. The Department argued that the respondent had multiple manufacturing units, some of which were closed, and they applied for the transfer of credit to a surviving unit after surrendering the registration certificates of the closed units. The original authority rejected the application, but the Commissioner (Appeals) overturned this decision. The Department contended that the Commissioner's decision violated Rule 10(3) of the Cenvat Credit Rules, 2004, and if the order is not stayed, the respondent would gain undue benefit.

2. Upon reviewing the records, the judge found that the application for transfer of unutilized Cenvat credit was made after surrendering the registration of the closed factories. It was noted that when a factory's registration is surrendered, there is no factory to transfer the credit to. Rule 10(1) of the Cenvat Credit Rules allows for the transfer of credit when a factory is shifted to a new site or ownership is transferred. Rule 10(3) specifies that the transfer of credit is permitted only if the stock of inputs or capital goods is also transferred along with the factory. The judge considered the argument presented by the Department's Superintendent (AR) to be valid based on these legal provisions.

3. In conclusion, the judge allowed the stay application, indicating that the arguments presented by the Department regarding the transfer of unutilized Cenvat credit from closed units to a surviving unit were valid under the relevant provisions of the Cenvat Credit Rules. The order was pronounced and dictated in open court, granting the stay of the impugned order.