2018 (3) TMI 1112 - AT - Central Excise

Refund claim - the respondent s Chinchwad unit has been transferred to the present address of the respondent. The appellant paid the service tax on behalf of the Chinchwad unit on reverse charge basis, which is now sought as refund - Held that - any CENVAT credit lying unutilized with the transferor unit can be transferred to transferee unit subject to condition that input attributable on which credit was availed has also been transferred to the new location - As per the facts of the case, there is no dispute that the entire factory of Chinchwad has been transferred to the present location i.e. Khed. Therefore, whatever credit is available to Chinchwad shall be allowed to be transferred to the new location in terms of Rule 10. Since the respondent has complied with the provisions of Rule 10, the Commissioner (Appeals) rightly allowed refund of service tax paid by the respondent on behalf of Chinchwad unit as cenvat credit in the books of the respondent. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Claim for refund of service tax paid on reverse charge basis under Rule 10 of Cenvat Credit Rules.
2. Transfer of Cenvat credit from transferor unit to transferee unit under Rule 10.
3. Requirement of permission for transfer of Cenvat credit.

Analysis:

Issue 1: Claim for refund of service tax paid on reverse charge basis under Rule 10 of Cenvat Credit Rules:
The respondent's Chinchwad unit was transferred to a new location, and the appellant paid service tax on reverse charge basis. The respondent claimed a refund for this payment under Rule 10 of the Cenvat Credit Rules. The adjudicating authority initially rejected the claim, but the Commissioner (Appeals) allowed it based on the provisions of Rule 10 and relevant case law.

Issue 2: Transfer of Cenvat credit from transferor unit to transferee unit under Rule 10:
Rule 10 of the Cenvat Credit Rules allows for the transfer of unutilized Cenvat credit from a transferor unit to a transferee unit in cases of factory shift or change in ownership. In this case, since the entire Chinchwad factory was transferred to the new location at Khed, the Cenvat credit available to the Chinchwad unit was deemed transferable to the new location as per Rule 10.

Issue 3: Requirement of permission for transfer of Cenvat credit:
The Revenue contended that the respondent should have obtained permission for the transfer of Cenvat credit. However, Rule 10 does not stipulate any requirement for such permission. The Tribunal held that compliance with Rule 10, which involves transferring the input attributable to the credit availed to the new location, was sufficient. Therefore, the argument regarding the necessity of permission was deemed untenable and rejected.

In conclusion, the Tribunal upheld the Commissioner (Appeals)' decision to allow the refund of service tax paid by the respondent on behalf of the Chinchwad unit under Rule 10. The appeal by the Revenue was dismissed, as the transfer of Cenvat credit from the transferor unit to the transferee unit was found to be in accordance with the provisions of Rule 10.