2015 (10) TMI 1157 - AT - Central Excise

Waiver of pre deposit - Disallowance of CENVAT Credit - Held that - From letters dt. 29.9.2011 and dt. 10.10.2011 enclosing an undertaking on non-judicial stamp paper dt. 8.10.2011, it is clear that appellant at every stage intimated the department and also sought for single registration. Appellants in their letter dt. 29.9.2011 clearly referred to Rule 10 of CCR seeking for single registration and also undertook to binding themselves to all assets and liabilities of other companies. The department has not caused verification in spite of appellant submitting the documents furnished in Dec 2014. Prima facie, we find that appellants have made out a case for total waiver of predeposit. Accordingly, there shall be waiver of predeposit and stay of recovery of demand in question during pendency of appeal. - Stay granted.

Summary

Issues:
1. Transfer of credit between units of the same company.
2. Compliance with conditions for availing credit.
3. Verification of documents by the department.

Transfer of Credit Between Units:
The case involved the transfer of credit amounting to &8377; 41,36,321 from one unit to another within the same company following a merger. The appellant argued that both units belonged to the same group of companies and had undergone a merger as per the Board's resolution. The appellant had intimated the authorities about the merger and sought single registration. The department issued a show cause notice disallowing the credit transfer, citing non-compliance with stipulated conditions.

Compliance with Conditions for Availing Credit:
The appellant contended that they had paid the duty upon debonding one unit and availed the credit accordingly. They had followed the necessary procedures for merging the units, including intimating the jurisdictional authorities and submitting required documents. The appellant claimed to have fulfilled the conditions under Rule 10 of CCR for single registration. However, both the adjudicating authority and appellate authorities disallowed the credit transfer, alleging failure to comply with the prescribed conditions.

Verification of Documents by the Department:
The department argued that despite the appellant's submissions and intimation, they had not taken steps to verify the information with the jurisdictional Range Superintendent. The appellate tribunal noted that the appellant had consistently informed the department at various stages, including providing an undertaking on assets and liabilities. The tribunal found that the department had not conducted any verification even after receiving documents in December 2014. Consequently, the tribunal held that the appellants had made a case for total waiver of predeposit, granting a stay of recovery of the demand during the appeal's pendency.

This judgment highlights the importance of compliance with procedural requirements for credit transfer between units of the same company, the significance of proper documentation and intimation to authorities, and the obligation of the department to conduct necessary verifications before disallowing credits.