2022 (4) TMI 362 - AT - Central Excise

CENVAT Credit - transfer of the unit - capital goods were shifted on payment of duty in terms of Rule 10 (3) of Cenvat Credit Rules, 2004 - HELD THAT - It is a fact on record that there were no physical input or were in progress available at the time of shifting of the factory, but Cenvat credit was lying in their Cenvat credit account, therefore, as held by this Tribunal in the case law cited by the learned Counsel of the appellant, particularly in the case of KEVIN ENTERPRISES PVT. LTD. VERSUS COMMISSIONER OF C. EX., VADODARA 2006 (6) TMI 449 - CESTAT, MUMBAI , wherein this Tribunal has held that where the stock did not exist and the capital goods, on which the credit was availed, were duly accounted for, transfer of Cenvat credit lying unutilised, should not be refused. The appellant is entitled for transfer of Cenvat credit lying in their Cenvat credit account on transfer of the factory although no input or work in progress is on record - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of transfer of Cenvat credit on transfer of unit.

Analysis:
The appellant appealed against the denial of transfer of Cenvat credit upon shifting their factory from one location to another. The appellant had two units in different sectors of Noida and requested the transfer of the closing balance of input credit from one unit to another. The Assistant Commissioner rejected the request citing Rule 10(3) of Cenvat Credit Rules, 2004, stating that transfer could only occur if stock of input or capital goods were also transferred along with the factory. The Commissioner (Appeals) upheld the denial due to lack of supporting documents and delayed transfer. The appellant argued that the denial was contrary to Rule 10 and referenced previous judgments in their favor. The Authorized Representative supported the impugned order.

Upon hearing both parties, the Tribunal noted that no physical input or work in progress was available during the factory shift, but Cenvat credit was present in the account. Citing the case of Kevin Enterprises Pvt. Ltd., the Tribunal emphasized the need for the Commissioner to consider the transfer request based on specific findings regarding the availability of stock of inputs and proper accounting of capital goods. The Tribunal held that the appellant was entitled to transfer the Cenvat credit despite the absence of physical stock, overturning the impugned order and granting the appeal with any consequential relief.

In conclusion, the Tribunal allowed the appeal, emphasizing the right of the appellant to transfer Cenvat credit between units even in the absence of physical stock during the factory shift. The decision was based on the interpretation of relevant rules and previous case law supporting the transfer of credit under similar circumstances.