2015 (3) TMI 293 - AT - Central Excise

Waiver of pre deposit - Denial of CENVAT Credit - Cenvat Credit balance transferred from the 100% EOU at the time of conversion into DTA unit - Held that - After conversion of 100% EOU to DTA unit the appellant has transferred capital goods, input, work in progress and finished goods on payment of duty. Therefore, the appellants are entitled to take Cenvat Credit in DTA unit which was lying unutilized with the books of accounts of 100% EOU unit, which has been allowed by the Hon'ble Madras High Court in the case of CESTAT (2008 (7) TMI 116 - HIGH COURT MADRAS). In these terms, we set aside the impugned order and allow the appeal with consequential relief if any - Decided in favour of assesse.

Issues involved:
1. Conversion of 100% EOU to DTA unit and transfer of Cenvat Credit.
2. Denial of Cenvat Credit by Revenue.
3. Interpretation of Rule 10 regarding transfer of inputs and capital goods.
4. Applicability of previous judicial decisions on similar issues.

Analysis:

1. Conversion of 100% EOU to DTA unit and transfer of Cenvat Credit:
The appellant, initially a 100% EOU, converted into a DTA unit, leading to a dispute with the Revenue regarding the transfer of Cenvat Credit balance. The appellant transferred capital goods, work in progress, and finished goods to the DTA unit after payment of applicable duty. However, the Revenue objected to the transfer of Cenvat Credit, claiming that physical transfer of goods did not occur at the time of taking credit in the DTA unit. This dispute prompted the initiation of proceedings and issuance of a show cause notice to deny the Cenvat Credit.

2. Denial of Cenvat Credit by Revenue:
The Revenue's objection was based on the lack of physical transfer of goods at the time of taking Cenvat Credit in the DTA unit, without prior permission from the appellant. The show cause notice was adjudicated, resulting in a demand for duty, interest, and penalty. The appellant contested these orders, leading to the appeal before the Tribunal.

3. Interpretation of Rule 10 regarding transfer of inputs and capital goods:
The appellant's counsel relied on the Tribunal's decision in a similar case, emphasizing the requirement for the transfer of stock of inputs or capital goods along with the factory for allowing the transfer of Cenvat Credit. The Tribunal's decision highlighted the importance of satisfying the authorities regarding the transfer of inputs or capital goods. The counsel also cited a High Court decision supporting the appellant's position on the issue of transferring Cenvat Credit.

4. Applicability of previous judicial decisions on similar issues:
The Tribunal considered the submissions made by the appellant's counsel, acknowledging that the appellant had indeed transferred capital goods, inputs, work in progress, and finished goods to the DTA unit after conversion. Relying on the precedents set by the High Court and the Tribunal in similar cases, the Tribunal concluded that the appellant was entitled to take Cenvat Credit in the DTA unit. As a result, the impugned order was set aside, and the appeal was allowed with consequential relief. The stay application was also disposed of accordingly.

In conclusion, the Tribunal's judgment favored the appellant, allowing the transfer of Cenvat Credit from the 100% EOU to the DTA unit based on the physical transfer of goods and previous judicial decisions supporting the appellant's position.

← Previous Next →