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2017 (6) TMI 814 - HC - Central ExciseUtilisation of CENVAT credit - Whether in the facts and circumstances of the case, the Tribunal was right in coming to the conclusion that the respondent/ Assessee was entitled to avail of, un-utilized cenvat credit in terms of Rule 10 of the CCR, 2004? Held that - A mere perusal of sub-Rule (1) would show that transfer of cenvat credit is available to a manufacturer in several situations First, when the manufacturer of final products, shifts his factory to another site. Second, when, the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of factory to a joint venture, with specific provision for transfer of liabilities of such factory - It is, in these situations, the manufacturer is allowed transfer of cenvat credit lying un-utilized in his accounts, to such, transferred, sold, merged, leased or amalgamated factory. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Entitlement to avail un-utilized CENVAT credit under Rule 10 of the CENVAT Credit Rules, 2004. 2. Interpretation of Rule 10 concerning transfer of CENVAT credit upon factory relocation. 3. Compliance with conditions for transfer of CENVAT credit, including transfer of stock and capital goods. Detailed Analysis: 1. Entitlement to Avail Un-utilized CENVAT Credit: The core issue is whether the Tribunal was correct in concluding that the respondent/assessee was entitled to avail of un-utilized CENVAT credit under Rule 10 of the CENVAT Credit Rules, 2004. The respondent, a manufacturer of workstation chairs, closed its Hosur unit and sought to transfer un-utilized CENVAT credit to its Bangalore unit. The Assistant Commissioner initially rejected this request, leading the respondent to file for a refund under Rule 5 of the 2004 Rules. The Adjudicating Authority, and subsequently the Commissioner of Appeals, rejected the respondent's plea for transfer of un-utilized CENVAT credit, interpreting Rule 10 as inapplicable in cases where a unit is shut down and not transferred due to merger, amalgamation, or similar circumstances. 2. Interpretation of Rule 10 Concerning Transfer of CENVAT Credit: The Tribunal reversed the decision of the lower authorities, interpreting Rule 10 to include situations where a factory is relocated from one site to another. The High Court examined whether the respondent's case fell within the purview of Rule 10. Rule 10(1) allows transfer of CENVAT credit when a manufacturer shifts his factory to another site or transfers it due to change in ownership, sale, merger, amalgamation, lease, or joint venture. The Court concluded that the term "shifts" includes relocating a factory from one site to another, even if the original site is shut down. This interpretation aligns with the rule's purpose to enable the use of un-utilized CENVAT credit. 3. Compliance with Conditions for Transfer of CENVAT Credit: The appellant argued that transfer of CENVAT credit under Rule 10 requires the transfer of stock and capital goods to the new site. The Court noted that the Adjudicating Authority did not address this aspect while deliberating on the issue. The respondent had provided the original records for examination, detailing the stock and capital goods transferred. The Court found no objections raised by the Adjudicating Authority regarding this compliance, suggesting that the necessary information was supplied and examined. Conclusion: The High Court sustained the Tribunal's conclusion, albeit for different reasons, affirming that the respondent/assessee was entitled to transfer un-utilized CENVAT credit under Rule 10 of the 2004 Rules. The Court dismissed the appeal, answering the question of law in favor of the respondent/assessee and against the appellant/revenue. The appeal was dismissed with no order as to costs.
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