2008 (7) TMI 116 - HC - Central Excise

Shifting of factory - capital goods, inputs and the balance unutilised credit in question have been properly received and accounted for by the assessee in the respective registers - rule does not require that the assessee can transfer the credit corresponding only to the quantum of inputs transferred to the new factory, but permits the assessee to transfer the available credits along with inputs and capital goods in stock at the factory to the new location credit rightly transferred

Summary

Issues:
Appeal against CESTAT's final order, Compliance with Rule 8 of Cenvat Credit Rules.

Analysis:
The case involved an appeal by the Department against Final Order No. 1139/2007 made by CESTAT, concerning a manufacturer of polypropylene bags and tubing. The Commissioner initially dropped proceedings against the manufacturer, but later directed a review leading to a partial grant of relief. The manufacturer appealed to CESTAT, which allowed the appeal. The Department challenged this decision by framing questions of law related to Rule 8 of the Cenvat Credit Rules and the maintainability of the appeal itself.

The main issue revolved around whether the manufacturer complied with Rule 8 of the Cenvat Credit Rules, which pertains to the transfer of credit in case of shifting a factory to a new site. Rule 8 allows for the transfer of unutilized Cenvat credit to the new factory if certain conditions are met, including transferring stock of inputs and capital goods. In this case, the manufacturer shifted its factory and transferred inputs and capital goods to the new site, which were verified by Range officers. The manufacturer also informed the Deputy Commissioner and underwent necessary verifications, ensuring proper accounting of inputs and credit balances.

The High Court analyzed the facts and determined that the manufacturer had fulfilled the requirements of Rule 8 by transferring inputs, capital goods, and unutilized credit balances to the new factory location. The Court emphasized that Rule 8 does not restrict credit transfer based on the quantum of inputs transferred, allowing for the transfer of available credits along with stock to the new site. As a result, the Court found no discrepancies or infirmities in the manufacturer's actions, dismissing the Department's appeal and upholding the decision of CESTAT. The Court concluded that there were no unresolved legal questions warranting further consideration, leading to the dismissal of the appeal without costs.