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2014 (11) TMI 29 - AT - Central ExciseTransfer of CENVAT Credit - change in ownership - No transferring of the inputs and capital goods to the appellant - Rule 10 of CENVAT Credit Rules, 2004 - Held that - It can be seen from the reproduced sale certificate issued by M/s Arcil (Assets Reconstruction company which is formed under the provisions of RBI Act), it transpires that the entire property of M/s Santogen Spinning Mills was handed over to the appellant with all the encumbrances and liabilities which are known and unknown. It would be correct to record that the appellant herein had procured the assets and liabilities from M/s ARCIL, which would include the credit balance lying in books of account of M/s Santogen Spinning Mills. In our considered view, having accepted the entire assets and liabilities together, the appellant cannot be denied the CENVAT Credit which is lying in balance as unutilized credit in the books of account of M/s Santogen Spinning Mills. Tribunal had clearly recorded that the assessee, even after surrender of registration certificate, chose to retain Central Excise record which made it clear that they wanted to make a debit entry even after surrender of licence. In the case in hand, it is on record that the Central Excise registration certificate issued to M/s Santogen Spinning Mills was surrendered after granting of Central Excise registration to the appellant herein. impugned order is incorrect, unsustainable and liable to be set aside. - credit allowed - Decided in favour of Assessee.
Issues Involved:
1. Wrongful availing of CENVAT Credit. 2. Transfer of CENVAT Credit under Rule 10 of CENVAT Credit Rules, 2004. 3. Legitimacy of appellant's claim to CENVAT Credit. 4. Applicability of the Tribunal's decision in Shasun Pharma Ltd Vs CCE Trichy. Issue-wise Detailed Analysis: 1. Wrongful Availing of CENVAT Credit: The appellant, M/s Jai Corp Ltd, availed CENVAT Credit amounting to Rs. 1,57,09,460/- as "old credit balance transferred from M/s Santogen Spinning Mills." The adjudicating authority issued a show cause notice to recover the said CENVAT Credit with interest and imposed penalties, contending that the appellant wrongly utilized the CENVAT Credit towards payment of Central Excise duties. 2. Transfer of CENVAT Credit under Rule 10 of CENVAT Credit Rules, 2004: The adjudicating authority denied the CENVAT Credit based on Rule 10, which allows the transfer of CENVAT Credit if a factory is transferred on account of sale, merger, or change in ownership with specific provisions for transfer of liabilities. The authority argued that the inputs and capital goods were not transferred to the appellant, thus disqualifying the transfer of CENVAT Credit. 3. Legitimacy of Appellant's Claim to CENVAT Credit: The appellant argued that they purchased the assets and liabilities of the defunct M/s Santogen Spinning Mills, including the unutilized CENVAT Credit. The sale certificate issued by M/s ARCIL confirmed the transfer of assets and liabilities, including all encumbrances. The Tribunal found that the appellant took over the entire property with all known and unknown liabilities, thereby entitling them to the CENVAT Credit lying in the books of M/s Santogen Spinning Mills. 4. Applicability of the Tribunal's Decision in Shasun Pharma Ltd Vs CCE Trichy: The Revenue's argument referenced the Tribunal's decision in Shasun Pharma Ltd Vs CCE Trichy, where the retention of Central Excise records after surrendering the registration certificate indicated an intention to make debit entries. The Tribunal found this case inapplicable as the facts differed; M/s Santogen Spinning Mills surrendered their registration only after the appellant obtained their Central Excise registration. Conclusion: The Tribunal concluded that the adjudicating authority's findings were incorrect and unsustainable. The appellant's acquisition of assets and liabilities, including the unutilized CENVAT Credit, was legitimate under Rule 10 of the CENVAT Credit Rules, 2004. The impugned order was set aside, and the appeal was allowed with consequential relief. Final Judgment: The appeal was allowed, and the impugned order was set aside, granting consequential relief to the appellant. The judgment was pronounced in court on 21.10.2014.
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