2015 (10) TMI 1915 - AT - Central Excise

CENVAT Credit - Nil balance of credit at the time of transfer of business - Rule 10 of CCR - whether the applicant is eligible to avail transfer of credit under Rule 10 of Cenvat Credit Rules, 2004 and whether they are required to reverse the Cenvat credit on the value of closing stock of raw materials and semi-finished goods - Held that - prima facie, the reversal of the Cenvat credit on the value of closing stock of raw materials and semi-finished goods is not supported by Rule 10 of Cenvat Credit Rules. - Applicant made out a prima facie case for waiver of pre-deposit of balance amount of duty along with interest and penalty. Accordingly, pre-deposit of balance amount of duty along with interest and penalty is waived till disposal of the appeal. - Stay granted.

Summary

Issues involved:
1. Eligibility to avail transfer of credit under Rule 10 of Cenvat Credit Rules, 2004.
2. Requirement to reverse Cenvat credit on the value of closing stock of raw materials and semi-finished goods.

Analysis:

Issue 1: Eligibility to avail transfer of credit under Rule 10 of Cenvat Credit Rules, 2004:
The judgment addresses the question of whether the applicant is entitled to transfer credit under Rule 10 of the Cenvat Credit Rules, 2004. The rule allows for the transfer of unutilized Cenvat credit when a manufacturer shifts their factory or business. In this case, it was noted that there was a 'nil' balance in the Cenvat account at the time of transfer. The rule specifically states that the manufacturer can transfer unutilized credit to the new entity. Since there was no unutilized balance in the Cenvat account during the transfer, the judgment opined that the reversal of Cenvat credit on the value of closing stock of raw materials and semi-finished goods is not supported by Rule 10 of Cenvat Credit Rules.

Issue 2: Requirement to reverse Cenvat credit on the value of closing stock of raw materials and semi-finished goods:
The judgment also considers the requirement to reverse Cenvat credit on the value of closing stock of raw materials and semi-finished goods. The applicant had already deposited a certain sum, and after hearing both sides, it was found that the applicant had made a prima facie case for waiver of the balance amount of duty along with interest and penalty. Consequently, the pre-deposit of the balance amount of duty along with interest and penalty was waived until the appeal's disposal, and the stay application was allowed.

In conclusion, the judgment delves into the intricacies of Rule 10 of the Cenvat Credit Rules, 2004, and the implications of the applicant's eligibility for credit transfer. It also addresses the issue of reversing Cenvat credit on the value of closing stock of raw materials and semi-finished goods, ultimately granting a waiver for the balance amount of duty along with interest and penalty until the appeal's resolution.