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2017 (8) TMI 97 - AT - Central ExciseCENVAT credit - transfer of CENVAT credit - Rule 10 - eligibility or otherwise of the assessee to avail cenvat credit of ₹ 1,44,10,817/- relating to their Vasai unit which was again taken in their books of accounts after transfer of their unit to Guntur - Held that - Rule 10 of the Rules facilitates transfer of cenvat credit available on record in situations when a factory is shifted or transferred on account of change in ownership, sale, merger etc. The procedural requirements tied to such transfer are very simple indeed. Obviously, the intention of the legislature is to ensure that when such a situation arises, as they often do in the course of trade and commerce, the transition, at least from the CE point of view, should be as simple and seamless as possible and not weighted down with onerous procedural requirements. Where there is only a mere shifting of factory involved, the proceduralities are even more simple. In our view, assessee cannot be faulted for not having intimated the jurisdictional CE authorities, initially those in charge of the erstwhile factory and subsequently to the Guntur CE authorities. As seen above, Vasai CE authorities have even confirmed the availability of ₹ 1,44,10,817/- lying as balance in the cenvat credit account of the erstwhile factory. This being so, and without any allegation that stock of inputs, goods in process / finished products or capital goods have not been transferred from Vasai to Guntur factory, but otherwise diverted or sold clandestinely, it would be puerile to cast any allegation on the assessee that they are not entitled to enter the same account of credit in their registers / books of account of their Guntur factory. The assessee has substantially complied with the procedural requirements of Rule 10 of CCR 2004 and substantive benefit extended vide that rule, namely, facilitating transfer of cenvat credit/PLA from their erstwhile Vasai factory to their new Guntur factory, cannot be then denied - appeal allowed - decided in favor of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal by the department. 2. Eligibility of the assessee to avail Cenvat credit after shifting the factory from Vasai to Guntur. 3. Compliance with Rule 10 of Cenvat Credit Rules, 2004. 4. Validity of the department's demand and penalty imposition on the assessee. Issue-wise Detailed Analysis: 1. Condonation of Delay: The department filed a Miscellaneous Application (MA) for condonation of a 434-day delay in filing the appeal, explaining that the delay was due to initially filing the appeal before the Joint Secretary, Government of India, which was deemed not maintainable. The Tribunal found these grounds to be genuine and condoned the delay, allowing the MA. 2. Eligibility of Cenvat Credit: The core issue was whether the assessee was eligible to avail Cenvat credit amounting to ?1,44,10,817/- after shifting their factory from Vasai to Guntur. The Tribunal noted that the legal provisions for such a transfer are governed by Rule 10 of the Cenvat Credit Rules, 2004. The Tribunal found that the assessee had initiated correspondence with the jurisdictional authorities at both Vasai and Guntur, informing them about the shifting of the factory and the intention to transfer the Cenvat credit. The Tribunal highlighted that Rule 10 allows such a transfer provided the stock of inputs and capital goods are duly accounted for to the satisfaction of the jurisdictional Assistant/Deputy Commissioner of Central Excise. 3. Compliance with Rule 10 of Cenvat Credit Rules, 2004: The Tribunal examined the compliance with Rule 10 and found that the assessee had informed the authorities at both Vasai and Guntur about the shifting and had submitted necessary documents, including letters, invoices, and transport documents. The Tribunal noted that the Deputy Commissioner of Central Excise, Vasai Division, had confirmed the availability of the credit balance and that the assessee had communicated the transfer of finished goods and machinery to the Guntur unit. The Tribunal concluded that the assessee had substantially complied with the procedural requirements of Rule 10. 4. Validity of the Department's Demand and Penalty: The department had issued a Show Cause Notice (SCN) proposing the recovery of the disputed Cenvat credit and penalties. The original authority confirmed the demands and imposed a penalty of ?10 lakhs on the assessee. The Tribunal found that the department's objection was primarily based on the alleged non-compliance with Rule 10. However, the Tribunal held that the assessee had complied with the necessary procedural requirements and that the transfer of Cenvat credit was valid. Consequently, the Tribunal set aside the original authority's order and allowed the assessee's appeal, providing consequential relief as per law. Conclusion: The Tribunal dismissed the department's appeal, upheld the Commissioner (Appeals) order allowing the refund claim, and allowed the assessee's appeal against the demand and penalty. The Tribunal emphasized that the procedural requirements under Rule 10 of the Cenvat Credit Rules, 2004, had been substantially complied with by the assessee, and the substantive benefit of transferring Cenvat credit could not be denied.
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