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2016 (7) TMI 1028 - AT - Central ExciseCENVAT credit - transfer of CENVAT credit from lessor to the lessee - Rule 10 of CENVAT Credit Rules, 2004 - the appellant is rightly entitled to the CENVAT credit amounting to ₹ 49,08,230/- which was originally permitted to be transferred by the Assistant Commissioner, Yeshwathpur, Bangalore by his letter dated 23.11.2007 and there is no merit in the orders passed by the lower Revenue authorities. The appeal is allowed with consequential benefit, if any, to the appellant. - Decided in favor of assessee.
Issues:
1. Transfer of CENVAT credit from lessor to lessee. 2. Interpretation of Rule 10 of CENVAT Credit Rules, 2004. 3. Validity of demand for CENVAT credit, interest, and penalty. 4. Applicability of Circular No.77/1999-Cus. 5. Case laws supporting transfer of unutilised credit. Issue 1: Transfer of CENVAT credit from lessor to lessee The appellant, a lessee, entered into a lease agreement with a DTA unit and received permission to operate it as an EOU. The lessor transferred unutilised CENVAT credit to the appellant as per Rule 10 of CENVAT Credit Rules, 2004. The appellant argued that all assets and liabilities were transferred as per the lease agreement, enabling them to avail the credit. The Revenue contended that the appellant did not take over assets and liabilities, thus not entitled to the credit. Issue 2: Interpretation of Rule 10 of CENVAT Credit Rules, 2004 The Tribunal analyzed Rule 10, which allows transfer of unutilised credit from lessor to lessee in specific circumstances. The appellant fulfilled the conditions for credit transfer as per the rule, including the transfer of liabilities. The Tribunal cited precedents supporting such transfers and emphasized the lack of a prohibition on credit transfer upon conversion to an EOU. Issue 3: Validity of demand for CENVAT credit, interest, and penalty The impugned order confirmed the demand for CENVAT credit, interest, and imposed a penalty on the appellant. The Tribunal found no merit in the demand, considering the legality of the credit transfer and the lack of rationality in the Revenue's objections. The Tribunal highlighted the numerous judicial decisions upholding similar credit transfers, rendering the demand against the appellant unjustified. Issue 4: Applicability of Circular No.77/1999-Cus. The Revenue cited Circular No.77/1999-Cus., stating that unutilised credit would lapse upon conversion from a DTA unit to an EOU. However, the Tribunal noted that the circular was issued under the old Central Excise Act, and the present case fell under the CENVAT Credit Rules, 2004. The Tribunal concluded that the circular did not provide a basis for denying the credit transfer in the current scenario. Issue 5: Case laws supporting transfer of unutilised credit The appellant relied on various case laws, including decisions by different Tribunals and High Courts, which upheld the transfer of unutilised credit from lessor to lessee upon conversion to an EOU. The Tribunal extensively quoted these cases to support the appellant's claim and emphasized the consistent legal precedent in favor of such credit transfers. In conclusion, the Tribunal allowed the appeal, granting the appellant the right to the CENVAT credit amount originally permitted for transfer. The Tribunal found the Revenue's objections baseless, considering the legal provisions, precedents, and lack of merit in the demand for credit, interest, and penalty.
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