2018 (5) TMI 184 - AT - Central Excise

CENVAT credit - differential duty paid subsequently - shifting/transfer of the unit - Rule 10 of the CCR 2004 - Held that - credit is definitely admissible on the differential duty paid after shifting of their unit of Makarpura Unit and its merger with Atladra Unit - It is difficult to appreciate the contention of the Revenue that even if the Makarpura unit is no more in existence and closed down its business, but the outstanding customs dues for the past period could be recoverable but the differential duty cannot be admissible to the successor unit of the same company at Atladara. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Admissibility of cenvat credit on duty paid after shifting of manufacturing unit.
2. Interpretation of Rule 10 of the Cenvat Credit Rules 2004.
3. Liability for customs duty after closure of manufacturing unit.

Analysis:
The appeal in this case was filed against an order passed by the Commissioner of Central Excise, Customs and Service Tax, Vadodara, regarding the admissibility of cenvat credit on duty paid after the shifting of a manufacturing unit. The appellant had two units registered separately under the Central Excise Act, one of which was closed, and its registration surrendered after shifting manufacturing activities to another unit. The appellant paid duty for past imports made at the previous unit and availed credit at the new unit. The dispute arose over the admissibility of cenvat credit on the duty paid after the shifting of the unit, with the Revenue contending that the credit was not admissible under Rule 10 of the Cenvat Credit Rules 2004.

The appellant argued that both units should be considered as one entity after the merger, and therefore, the duty paid by the new unit should be considered as discharged for the previous unit as well. The Revenue, however, supported the findings of the lower authorities. The Tribunal, after hearing both sides and examining the records, found that the duty paid after the shifting of the unit was admissible for cenvat credit. The Tribunal noted that at the time of shifting, there was no occasion to discharge the differential duty, and the credit was definitely available to the new unit after the merger of the two units. The Tribunal disagreed with the Revenue's contention that the duty could be recoverable for the past period but not admissible as credit for the successor unit.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The judgment clarified the admissibility of cenvat credit on duty paid after the shifting of a manufacturing unit, emphasizing the continuity of liability and credit transfer in cases of unit mergers.