2024 (3) TMI 8 - AT - Central Excise

Relevant date for allowing interest on delayed transfer of Cenvat credit - What is the period of delay and which date is to be taken as a relevant date merger of M/s. Britco with M/s. Hindustan Coca Cola Beverages Limited? - HELD THAT - It is found that the scheme of arrangement of merger between M/s. Britco Foods Company Limited (M/s. Britco) with M/s. Hindustan Coca Cola Beverages Limited was approved by Hon ble Delhi High Court vide its order dated 10.09.1999 and this merger order of Hon ble High Court was conveyed by the appellant to the department vide its order dated 20.10.1999. The Modvat/Cenvat credit which was lying in the balance of M/s. Britco stand transferred to M/s. Hindustan Coca Cola Beverages Limited from the date of merger of two entities which was effected vide order dated 10.09.1999. This order was conveyed to the department on 20.10.1999 as per the record of the appellant. Department should have allowed the transfer of Modvat / Cenvat credit lying in RG23A and RG23C accounts of M/s. Britco Foods Company Limited to M/s. Hindustan Coca Cola Beverages Limited on receipt of letter of merger of two companies it is opined that 20.10.1999 is the date when department was informed of the formal merger of two entities and therefore the relevant date of transfer of Cenvat credit should be 20.10.1999. Thus, relevant date for allowing interest on delayed transfer of Cenvat credit as ordered by Hon ble Gujarat High Court in the above mentioned order dated 04.04.2013, will be 20.10.1999 - appeal allowed.

Summary

Issues Involved:
The issues involved in this case are the transfer of unutilized Cenvat credit on inputs and capital goods following a merger under the Companies Act, 1956, and the subsequent claim of interest for delayed approval of the credit transfer.

Transfer of Cenvat Credit:
The appeal pertained to the transfer of unutilized Cenvat credit on inputs and capital goods from M/s. Britco to the appellant following a merger approved by the Hon'ble Delhi High Court. The appellant had made multiple applications for the transfer of credit, which were initially rejected by the department. Subsequent legal proceedings and orders from the Hon'ble Gujarat High Court and the Commissioner led to the eventual approval of the transfer of Cenvat credit on capital goods to the appellant.

Claim of Interest for Delayed Approval:
The appellant claimed interest for the delay in approving the transfer of Cenvat credit, citing the delay in processing their applications and subsequent legal actions. The Commissioner initially rejected the claim of interest, citing the absence of a provision for interest under the Central Excise Act and Rules. However, the Hon'ble Gujarat High Court later set aside this decision and directed the department to calculate and pay the interest at a rate of 9% per annum for the delayed payment, along with an additional 6% simple interest per annum.

Judgment:
The Commissioner (Appeals) had rejected the appellant's claim for interest, stating that the relevant date for calculating interest should be after the formal approval of the merger by the Hon'ble High Court of Delhi. However, the Hon'ble Gujarat High Court's order specified the relevant date for calculating interest as the date when the department was informed of the formal merger, which was 20.10.1999. The Appellate Tribunal set aside the order-in-appeal and allowed the appeal, determining 20.10.1999 as the relevant date for calculating interest on the delayed transfer of Cenvat credit.

Conclusion:
The Appellate Tribunal's decision overturned the Commissioner (Appeals)'s rejection of the appellant's claim for interest and established 20.10.1999 as the relevant date for calculating interest on the delayed transfer of Cenvat credit, in accordance with the Hon'ble Gujarat High Court's order.