2015 (10) TMI 2069 - AT - Central Excise

Transfer of unutilized credit of SAD from one unit to other unit as per the provisions of Rule 10A - Held that - impugned order has dealt the issue in detail and came to the conclusion and held that there is no dispute on the eligibility of transfer of unutilized credit under Rule 10A of CCR and held that the appellants complied the conditions of the notification. Only ground on which it was denied is that whether such transfer of credit can be only after 01.07.2012 i.e. at the beginning of the quarter as stipulated in the notification. We find that Rule 10A which is self-contained provision introduced for transfer of credit of AED (SAD) and it has prospective effect. Once it is came into effect from 01.04.2012, transfer of unutilized credit from one unit to other unit is automatically permissible and the Rule also specifies that such transfer should takes place at the end of the quarter, which is in our opinion has prospective effect and only permissible at the end of a quarter. In the present case, as seen from the records, unit-II which was defunct and the credit remained unutilized was correctly transferred on 31.05.2012, immediately after introduction of Rule on 01.04.2012, as they are eligible to transfer the same from 01.07.2012. Even though they have transferred the credit on 31.05.2012, they have not utilized the entire credit and only ₹ 2.5 Crores was utilized before 01.07.2012. The said Rule 10A came into effect from 01.04.2012 and the credit which was already accumulated and remained unutilized prior to the amendment rightly can be transferred after 01.04.2012. In view of the above, we hold that the appellants are eligible for transfer of unutilized credit from unit-II to Unit-I and the transfer of the credit done by the appellant is in conformity with the provisions of Rule 10A, which was specifically introduced only for this purpose relating transfer of unutilized credit availed on SAD (AED). - Decided in favour of assessee.

Summary

Issues:
Transfer of unutilized credit under Rule 10A of CCR - Premature transfer of credit - Compliance with conditions of the notification - Permissibility of transfer before 01.07.2012 - Eligibility for transfer of credit - Imposition of penalty.

Analysis:
The case involved the transfer of unutilized credit from one unit to another under Rule 10A of CCR. The appellants, registered for manufacturing excisable goods, transferred a credit balance to another unit following the insertion of Rule 10A on 01.04.2012. The dispute arose when a Show Cause Notice was issued questioning the validity of the transfer and proposing recovery of the amount along with interest and penalties. The adjudicating authority confirmed the recovery, leading to the present appeals.

The appellant argued that the transfer was in compliance with the conditions of the notification, as the credit was transferred after the Rule came into effect on 01.04.2012. The Revenue contended that the transfer was premature and not in accordance with Rule 10A. The Tribunal examined the provisions of Rule 10A, which allowed for the transfer of unutilized credit at the end of a quarter, and found that the transfer made by the appellants on 31.05.2012 was permissible. It was noted that the Rule had prospective effect and applied to credits accumulated before the amendment, allowing for transfer after 01.04.2012. The appellants had not utilized the entire credit before 01.07.2012, further supporting the validity of the transfer.

The Tribunal held that the appellants were eligible for the transfer of unutilized credit from one unit to another, as per the provisions of Rule 10A. The transfer was deemed to be in conformity with the Rule introduced specifically for such transfers. Consequently, the impugned order was set aside, and both appeals were allowed. No penalty was imposed on the appellants, given their compliance with the conditions of the notification and the permissibility of the transfer under Rule 10A.