2018 (7) TMI 853 - AT - Central Excise

Transfer of Credit - Rule 10 of CCR, 2004 - denial on the ground that the appellant have not obtained the prior permission for transfer of credit and stock of the goods - Held that - Rule 10 does not prescribe any procedure to be followed for transfer of the credit lying unutilized from transferred unit to transferee unit. The only requirement is that if any stock of raw-material, capital goods and other goods on which Cenvat credit had been availed, the same should also be transferred to the transferee unit. It is obvious that if any unit has to be transferred it can be transferred during the registration only and there is no mandatory requirement that shifting can be done only after surrender of the registration of the transferred unit. Therefore, this condition was also unnecessarily imposed by the Adjudicating Authority. The Adjudicating Authority denied the credit transferred from Silvassa to Surat only on the ground which is not supported by any authority of law. At the same time, no verification of records of Silvassa and Surat was carried out by the Adjudicating Authority or the Jurisdictional Assistant Commissioner - In these circumstances, the Adjudicating Authority must get the records verified and thereafter pass a reasoned order. Appeal allowed by way of remand.

Summary

Issues:
Transfer of factory and unutilized credit from one unit to another without prior permission and registration surrender.

Analysis:
The appeal dealt with the transfer of a factory, along with plant, machinery, and raw materials, from one unit to another without obtaining prior permission and surrendering the registration. The appellant transferred unutilized credit from the original unit to the new unit under Rule 10 of CCR, 2004. The revenue denied the credit transfer, citing lack of permission and registration surrender. The appellant argued that Rule 10 does not mandate permission but requires transferring stock of goods to the new unit. They informed the department through letters about the transfer, emphasizing their bona fide intentions. The Tribunal noted that Rule 10 does not specify a procedure for credit transfer, only requiring the transfer of goods with credit availed. The Adjudicating Authority's imposition of conditions like prior permission was deemed unwarranted. The Tribunal emphasized that the transfer could occur during registration, and the shifting before registration surrender did not invalidate the credit transfer. The appellant had informed the relevant authorities about the transfer, but no verification was conducted. The Tribunal held that the denial of credit solely on the grounds of lack of permission and registration surrender was unsupported by law. It directed the Adjudicating Authority to verify records and issue a reasoned order, allowing the appeal for remand.

In conclusion, the Tribunal found the denial of credit based on unauthorized grounds to be unjustified. It emphasized the lack of legal requirement for prior permission and registration surrender for credit transfer. The Tribunal highlighted the appellant's communication with authorities as evidence of their good faith. It directed the Adjudicating Authority to verify records before making a decision, underscoring the importance of a reasoned order based on facts. The appeal was allowed for remand, emphasizing the need for a fair and lawful assessment of the credit transfer.