2014 (2) TMI 108 - AT - Central Excise

Exemption under Notification No. 204/92-CUS dated 19/5/92 - Failure to meet the export obligation - Availment of CENVAT Credit - Whether the appellant would be eligible for Cenvat credit - Held that - CRNGO steel sheets had been imported by the previous owner of the factory M/s Kelvinator of India Ltd. in 1993-94. At that time, the import was made free of duty against advance licences with export obligation. During 1995-96, the factories of M/s Kelvinator of India Ltd. were taken over by M/s Whirlpool of India Ltd. As per the Commissioner s finding, the CRNGO steel sheets had been used in Ballabhgarh unit of M/s Kelvinator of India Ltd. for manufacture of Rotors and Stators and subsequently, the Ballabhgarh factory had been sold by new owners - (M/s Whirlpool of India Ltd.) to another company M/s Tecumseh India (P) Ltd. in 1997. Even if the customs duty alongwith additional customs duty in respect of the goods imported against advance licences free of duty by M/s Kelvinator of India Ltd. during 1993-94 was paid by the present appellant in 2002, they would be eligible for Cenvat credit of this additional customs duty, if and only if they have evidence to prove that the goods on which this duty had been paid had also been transferred by M/s Kelvinator of India Ltd. to them and had been used by them in the manufacture of excisable goods. If the goods imported by M/s Kelvinator of India Ltd. free of duty during 1993-94 were used by them (M/s Kelvinator) in the manufacture of Rotors and Stators prior to their factory having been taken over by the present appellant and, as such, the present appellant did not receive on transfer the stock of CRNGO steel sheets imported by M/s Kelvinator against advance licences, they (the appellant) would not be eligible for Cenvat credit, even if the duty on those goods was subsequently paid by them in 2002 for failure to meet the export obligation. But, if some quantity of steel sheets imported by M/s Kelvinator of India Ltd. had got transferred to M/s Whirlpool of India Ltd. (the appellant) when they took over the factories of M/s Kelvinator of India Ltd., and that quantity was used by them for manufacture they would be eligible for Cenvat credit of additional customs duty paid by them in 2002 on that quantity - Matter remanded back.

Summary

Issues Involved:
1. Eligibility for Cenvat credit.
2. Validity of documents for availing Cenvat credit.
3. Timeliness of taking Cenvat credit.
4. Transfer and utilization of Cenvat credit post-ownership change.

Issue-wise Detailed Analysis:

1. Eligibility for Cenvat Credit:
The primary issue is whether M/s Whirlpool of India Ltd. is eligible for Cenvat credit for the additional customs duty paid on CRNGO steel sheets imported by M/s Kelvinator of India Ltd. in 1993-94. The Department contends that the appellant failed to establish the use of these steel sheets in their factory for manufacturing excisable goods. The appellant argues that the goods were used in the manufacture of finished products cleared on payment of duty, and hence, the Cenvat credit should be allowed. The Tribunal notes that if the goods were used by M/s Kelvinator before the takeover, the appellant would not be eligible for credit. However, if the goods were transferred to M/s Whirlpool and used in their manufacturing process, they would be eligible for the credit. The matter is remanded for de-novo adjudication to ascertain this fact.

2. Validity of Documents for Availing Cenvat Credit:
The Department argues that the credit was taken without valid documents, specifically mentioning that TR-6 challan is not a valid document for availing Cenvat credit. The appellant contends that the duty was paid under the directions of the DGFT and Settlement Commission, and the TR-6 challan should be considered valid in this context. The Tribunal does not provide a definitive ruling on the validity of the TR-6 challan but emphasizes the need for proper documentation to support the claim for Cenvat credit.

3. Timeliness of Taking Cenvat Credit:
The Department asserts that the credit was taken long after the receipt of the inputs and beyond six months from the date of duty payment. The appellant counters that during the relevant period, there was no provision in the Cenvat Credit Rules imposing a six-month limit for availing credit. The Tribunal acknowledges the appellant's argument but does not conclusively resolve the issue, indicating that the timeliness of the credit should be considered in the de-novo adjudication.

4. Transfer and Utilization of Cenvat Credit Post-Ownership Change:
The Tribunal highlights Rule 8 of the Cenvat Credit Rules, 2002, which allows the transfer of Cenvat credit during a change in ownership, provided the stock of inputs is also transferred. The Tribunal notes that if the CRNGO steel sheets were used by M/s Kelvinator before the takeover, the credit cannot be transferred to M/s Whirlpool. However, if the goods were transferred and used by M/s Whirlpool, they would be eligible for the credit. The Tribunal remands the matter to the Commissioner to verify if the goods were transferred and used by the appellant.

Conclusion:
The Tribunal sets aside the impugned order and remands the matter for de-novo adjudication to ascertain whether the CRNGO steel sheets were transferred to and used by M/s Whirlpool of India Ltd. in the manufacture of excisable goods. The eligibility for Cenvat credit, validity of documents, timeliness of credit, and transfer of credit post-ownership change are to be re-evaluated based on the Tribunal's observations.