2007 (9) TMI 92 - AT - Service Tax

Credit in case of shifting of factory credit transferred is in excess of physical stock of inputs and capital goods As per Rule 8 Cenvat Credit Rules it is not required that the assessee can transfer credit corresponding only to the quantum of inputs transferred to a new factory

Summary

Issues:
- Stay application dismissal
- Appeal against Commissioner's order
- Excess credit demand confirmation
- Compliance with Cenvat Credit Rules
- Interpretation of Rule 8 regarding credit transfer

Stay Application Dismissal:
The Tribunal dismissed the stay application and proceeded with the main appeal for final disposal with the consent of both parties.

Appeal Against Commissioner's Order:
The appeal was filed by M/s. Sunpack, Pondicherry, against the Commissioner's order confirming a demand of Rs. 3,89,970 as excess credit compared to the credit corresponding to inputs transferred when the factory was shifted to a new premises. The original authority had dropped the proposals for recovery, finding that the assessee had fulfilled the conditions stipulated under Cenvat Credit Rules, 2002.

Excess Credit Demand Confirmation:
The impugned order demanded excess credit transferred into the Cenvat account of the new factory compared to the physical stock of inputs transferred. The Tribunal found that the appellants had shifted their factory, transferred capital goods and inputs, and accounted for them to the satisfaction of the authorities.

Compliance with Cenvat Credit Rules:
The Tribunal analyzed Rule 8 of the Cenvat Credit Rules, which allows the transfer of unutilized credit to a new factory along with inputs and capital goods. It was noted that the rule does not restrict the transfer to the quantum of inputs transferred. The authorities found that the appellants had accounted for inputs and capital goods satisfactorily, complying with the law.

Interpretation of Rule 8 Regarding Credit Transfer:
The Tribunal concluded that the appellants had transferred inputs, capital goods, and credit balance to the new factory in accordance with the law. Therefore, the impugned order demanding excess credit was deemed unsustainable, and the appeal was allowed.