2006 (2) TMI 9 - AT - Central Excise

Central Excise Cenvat credit Appellant shifted entire machinery to their entity at another situate after completion of projects Unutilized credit allowable

Summary

Issues:
Transfer of unutilized credit on shifting of factory from one location to another.

Analysis:
The appeal arose from the Commissioner's decision reversing the transfer of unutilized credit from a unit in Hyderabad to Bangalore. The appellant, a manufacturer of Aluminium Anodized Structural Glazing Frames, sought to transfer the accumulated Cenvat credit to their Bangalore unit after completing a project in Hyderabad. The Dy. Commissioner initially allowed the transfer, but the Revenue appealed, leading to the Commissioner's decision against the transfer.

The learned Counsel argued that the Tribunal had consistently upheld such transfers in various cases, citing precedents like AAR AAY Products Pvt. Ltd. v. CCE, Apco Industries Ltd. v. CCE, CCE v. Usha Iron and Ferrous Metals Corporation Ltd., Castrol India Ltd. v. UOI, CCE, Noida v. D.S. Foods Ltd., and Orient Ceramics (P) Ltd., v. CCE. These cases supported the transfer of unutilized credit in scenarios involving factory shifts, mergers, or changes in ownership.

The Revenue contended that the credit transfer was not permissible as the work in Hyderabad was completed, and there was no actual shifting of the factory. In response, the Counsel argued that moving all machinery from Hyderabad to Bangalore constituted a shift of the unit, not a closure. The Tribunal agreed with the Counsel, emphasizing that the physical relocation of machinery and operations, along with common management and duty payment, indicated a genuine shift of the factory. The judgments cited by the Counsel further supported this interpretation.

In conclusion, the Tribunal found that the transfer of unutilized credit was justified based on the factual circumstances and legal precedents. The impugned order was deemed incorrect, and the appeal was allowed with consequential relief, if any. The decision highlighted the importance of considering the practical aspects of factory relocation in determining the eligibility for credit transfers.

(Pronounced and dictated in open Court)