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2023 (8) TMI 994 - AT - Central ExciseTransfer of unutilized CENVAT Credit - entitlement of credit which was available in the books of accounts of one Vivin Laboratories Private Ltd., as they have taken over the plant and machinery of the said company on outright sale basis, including transfer of land - rejection of transfer of credit on grounds of lack of correlation of documents - violation of principles of natural justice - HELD THAT - It is found that the Respondent is the successor owner of the factory of Vivin Laboratories, with its assets and liabilities (which is nil on date of transfer), due to change of ownership on account of sale - It is held that Rule 3 of CCR is not applicable in the facts of the present case, as Rule 3 applies in case of removal of capital goods. Here there is no removal, as the capital goods remained in the same factory/premises, and there is only change of ownership. The respondent-assessee is entitled to take transfer of Cenvat Credit available in the books of the transferor Vivin Labs, as per Rule 10 of Cenvat Credit Rules. Appeal of Revenue dismissed.
Issues Involved:
1. Entitlement to CENVAT credit transfer. 2. Compliance with Rule 10 of Cenvat Credit Rules, 2004. 3. Requirement of specific provision for transfer of liabilities. 4. Correlation of transferred capital goods with credit entries. 5. Procedural compliance for transfer of credit. Summary: Entitlement to CENVAT Credit Transfer: The core issue was whether the appellant was rightly entitled to CENVAT credit available in the books of Vivin Laboratories Pvt. Ltd., after acquiring their plant and machinery through an outright sale, including the transfer of land. The Assistant Commissioner initially denied the transfer of CENVAT credit, citing various grounds, including the lack of specific provision for transferring liabilities and the inability to correlate items with entries in RG23C Part II extracts. Compliance with Rule 10 of Cenvat Credit Rules, 2004: The Commissioner (Appeals) allowed the transfer of CENVAT credit, stating that the respondent had complied with Rule 10 of CCR, 2004. It was noted that the factory premises remained the same, and there was merely a change in ownership. The Commissioner (Appeals) emphasized that no specific documents are prescribed under Rule 10(1) for such transfers and that the transfer of accumulated CENVAT credit on inputs is automatic if the conditions under Rule 10(3) are met. Requirement of Specific Provision for Transfer of Liabilities: The revenue contended that there was no specific provision for the transfer of liabilities in the sale deed, which is a precondition under Rule 10(1). However, the Commissioner (Appeals) found that the sale of complete assets, both immovable and movable, was complete based on the documents provided, and thus, the transfer of credit was justified. Correlation of Transferred Capital Goods with Credit Entries: The revenue argued that the respondent failed to produce documents to correlate the items mentioned in the invoices with the entries in RG23C Part II extracts. The Commissioner (Appeals) held that the transfer of credit is permissible even without such correlation if the capital goods are duly accounted for and transferred along with the factory. Procedural Compliance for Transfer of Credit: The revenue's appeal emphasized that the procedural requirements under Rule 10 were not met, including the need for specific provision for transfer of liabilities and proper documentation. The Commissioner (Appeals) and the Tribunal found that the procedural requirements were substantially complied with, and the transfer of credit was justified based on the available documents and the continuity of the manufacturing activity in the same premises. Conclusion: The Tribunal upheld the Commissioner (Appeals)'s order, allowing the transfer of CENVAT credit to the respondent. The appeal by the revenue was dismissed, affirming that the respondent was entitled to the CENVAT credit as per Rule 10 of the Cenvat Credit Rules, 2004. The judgment emphasized that procedural compliance should not be interpreted in a hyper-technical manner and that the substantial requirements of the rule were met.
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