2015 (10) TMI 1802 - AT - Central Excise

Transfer of credit due to change in ownership - Rule 10 of CCR - denial of Cenvat Credit lying unutilized - allegation is that the appellant has taken the credit without permission - Held that - As per rule 10 (3) of the Cenvat Credit Rules 2004 there is no requirement to take prior permission to take Cenvat Credit from the concerned authorities but credit is available to the assessee on being satisfied by the authorities that credit has been taken correctly. As the appellant has taken the credit and informed to the department they filed the ER return regularly and same has been accepted by the department, therefore question of taking any permission does not arise. - as held by the tribunal in the case the Om Glass Works Pvt. Ltd. (2012 (9) TMI 530 - CESTAT, NEW DELHI), I hold that Cenvat Credit is available to the appellant. - Decided in favour of assessee.

Summary

Issues:
Appeal against denial of Cenvat Credit for unutilized account takeover.

Analysis:
The appellant appealed against the denial of Cenvat Credit for unutilized funds in the account of a company taken over by them. The appellant took over the business of the company by agreement dated 10.02.2011, effective from 01.12.2012, and sought registration in their name. The concerned inspector visited the factory and verified the records, granting registration. The appellant filed regular ER-1 returns showing the available Cenvat Credit from the previous company. However, a letter was issued later to deny the credit, leading to a show cause notice demanding duty, interest, and penalty, which was confirmed through adjudication.

The appellant argued that Rule 10 of the Cenvat Credit Rules 2004 applied to their case. They contended that as per Rule 10(3), they were entitled to take the credit as they had intimated the department about the available credit through ER returns and the inspector had verified the evidence. The appellant claimed that the letter dated 05.03.2012 should be considered as seeking permission to take the credit, which they had already utilized. They emphasized that Rule 10(3) did not mandate seeking permission before availing the credit, citing relevant tribunal decisions to support their stance.

On the contrary, the Ld. AR supported the impugned order denying the credit. After hearing both parties, the Tribunal examined Rule 10(3) of the Cenvat Credit Rules 2004, which did not explicitly require prior permission to avail Cenvat Credit. The rule stated that credit transfer is allowed if inputs or capital goods are transferred along with the factory or business premises, and the credit is accounted for to the satisfaction of the authorities. Since the appellant had informed the department, filed regular ER returns, and the credit was accepted by the authorities, there was no need for prior permission to avail the credit.

In light of the above analysis and following the precedent set by the tribunal in similar cases, the Tribunal held that the Cenvat Credit was indeed available to the appellant. Consequently, the appeal was allowed with any necessary consequential relief.