2014 (7) TMI 529 - AT - Central Excise

Shifting of factory - transfer of unitlized cenvat credit to another factory - Penalty under Rule 25 of Central Excise Rules as also under Rule 15(1)of Cenvat Credit Rules 2004 - contravention of the provisions of Cenvat credit Rule - Held that - As such there is no dispute on record that the appellant filed due intimation with the Revenue for removal of the inputs finished goods semi-finished goods and capital goods to their Agra Unit. The only grievance of the revenue is that no prior permission was taken by them. It is not understood that when the intimations were being given why the revenue did not take action and stopped the appellant from shifting till the permission is granted by them. Further the lower authority have not referred to any provisions of law requiring prior permissions. When the due intimation stand given by the appellant the subsequent stand of the revenue they should have removed the goods only after due permission without any reference to any rule cannot be appreciated. The revenue was free to check the inventory of the goods even at the time of filing of intimation. In any case inasmuch as there are no alleged discrepancies I do not find it to be a case for fit imposition of penalty on the appellant - Decided in favour of assessee.

Summary

Issues:
Imposition of penalty under Rule 25 of Central Excise Rules and Rule 15(1) of Cenvat Credit Rules on M/s. Tej International Pvt. Ltd. and its Director for stock transfer of footwear, additive, and moulds without due credit reversal during factory shifting.

Analysis:

1. Factory Shifting and Stock Transfer:
The case involves the shifting of M/s. Tej International Pvt. Ltd.'s factory from Bhiwadi to Agra for merger purposes. The Revenue alleged stock transfer of footwear, additive, and moulds without due credit reversal, contravening Central Excise Rules and Cenvat Credit Rules. The penalty was imposed based on this stock transfer before official intimation of the unit shift. The appellants argued that no prior permission was required for such a shift, and all goods were accounted for and transferred with due intimation to the Revenue.

2. Commissioner's Decision:
The Commissioner upheld the penalty, stating that although there was no legal requirement for prior permission, the appellants should have informed the department to safeguard revenue interests during the shift. The Commissioner found fault with the appellants for not allowing the department to verify the goods being shifted and imposed penalties under Rule 25 of Central Excise Rules and Rule 15(1) of Cenvat Credit Rules.

3. Appellate Tribunal Decision:
The Appellate Tribunal reviewed the case and found that the appellants had indeed provided due intimation to the Revenue regarding the factory shift and stock transfer. The Tribunal noted that the Revenue had the opportunity to check the goods during the intimation process but did not raise any concerns then. As there were no discrepancies reported and no legal requirement for prior permission, the Tribunal set aside the penalties imposed by the lower authorities, ruling in favor of the appellants.

In conclusion, the Tribunal's decision emphasized the importance of due intimation to the Revenue during significant operational changes like factory shifting. While no prior permission was legally required, the appellants' proactive intimation fulfilled their obligation, and the Revenue's failure to act during the intimation process led to the penalties being overturned.