2017 (10) TMI 835 - AT - Central Excise

Transfer of CENVAT credit - change of ownership - whether permission is required from the jurisdictional authority and is it mandatory for availment of Cenvat credit? - Rule 10 of CCR - Held that - PAN number and ECC number which were held by Multi Pack System was the same, even ownership of the said Multi Pack System has been changed to the Appellant herein - the unit has undergone only a change in the name. It is also on record that the manufacturing activity under Central Excise registration number of Multi Pack System was the at very same place and subsequently, continued in the same place in the name of the Appellant herein. Rule 10(1) clearly indicates that if there is transfer of the factory due to change in ownership, the manufacturer shall be allowed to transfer the Cenvat credit lying unutilized to such transfer merged manufacturer - If the Appellant is functioning under different name and style from the very same place, mere change in shareholding pattern being accompanied by the change in the name of the transferor i.e. Multi Pack System cannot be said as change in ownership. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Transfer of cenvat credit on change of ownership/shareholding pattern, requirement of permission from jurisdictional authority for availing Cenvat credit.

Analysis:
The case involved an appeal against an order passed by the Commissioner (Appeals I), Central Excise, Customs & Service Tax, Vadodara, regarding the transfer of cenvat credit on change of ownership/shareholding pattern and the necessity of permission from the jurisdictional authority for availing Cenvat credit. The appellant had purchased a running unit with a change in shareholding pattern and applied for registration under a new name. The issue revolved around the transfer of unutilized cenvat credit to the appellant's account. The lower authorities had denied the benefit of cenvat credit based on Rule 10 of the Cenvat Credit Rules. However, the appellate tribunal noted that the change in ownership did not constitute a change in ownership as the PAN and ECC numbers remained the same, and the manufacturing activity continued at the same location under the appellant's name.

The tribunal referred to Rule 10 of the Cenvat Credit Rules, which allows the transfer of cenvat credit in case of a change in ownership. It emphasized that if there is a transfer of the factory due to a change in ownership, the manufacturer should be allowed to transfer the unutilized cenvat credit to the new entity. The tribunal found that the sale of the unit and the change in shareholding pattern did not result in a change in ownership as the appellant operated from the same location with the same PAN and ECC numbers. Therefore, the tribunal held that the impugned order denying the cenvat credit was unsustainable and set it aside, allowing the appeal in favor of the appellant.

In conclusion, the appellate tribunal ruled in favor of the appellant, allowing the transfer of unutilized cenvat credit on the change of ownership/shareholding pattern without the requirement of permission from the jurisdictional authority. The tribunal emphasized that the change in name and shareholding did not constitute a change in ownership as the manufacturing activity continued at the same location under the appellant's operation. The tribunal set aside the lower authorities' decision and allowed the appeal.