2018 (7) TMI 1593 - AT - Central Excise

Transfer of CENVAT Credit to other unit - Rule 10 of CCR - denial on the ground that the appellant has failed to comply with conditions of the said Rule - Held that - The transfer of credit is permissible when factory is shifted from one site to another. Such transfer of Cenvat Credit will be allowable just to satisfy to Sub Rule 3 which satisfy that stock of input as such are in progress, or goods is also transferred along with factory to the new site. The Sub Rule further provides that such transfer is to be duly accounted to the situation of the Jurisdictional AC/DC. - A view of the Department is that the condition of the Sub-Rule 3 has not been satisfied by the appellant. The findings of the lower authority is that the inputs/ capital goods on which credit has been availed as well as finished goods on which appellant is liable to pay duty were not available in the records of the Bagru Unit at the time of filing application for transfer (12/05/2012). But it is admitted by the appellant that the physical transfer preceded such application - the Department should have taken up the verification of the documents submitted by the appellant which appear to indicate clearly the stock position of various goods at the Bagru Unit at the time of its transfer. The documents evidencing the physical movement of such goods to the Manda Unit also have been submitted. Denial of transfer of credit not justified - matter is remanded to the Original Authority for reconsideration of the claim for transfer of Cenvat Credit after verification of the documents - appeal allowed by way of remand.

Summary

Issues:
Transfer of Cenvat Credits under Rule 10 of Cenvat Credit Rules, 2004.

Analysis:

Issue 1: Transfer of Cenvat Credits under Rule 10 of Cenvat Credit Rules, 2004

The appellant, a manufacturer of HDPE Pipes & Tubes, shifted their unit from Bagru Industrial Area to Manda Industrial Area. The dispute arose when the Department disallowed the transfer of Cenvat Credits from the Bagru Unit to the Manda Unit, citing non-compliance with Rule 10 of the Cenvat Credit Rules, 2004. The appellant contended that they had physically shifted assets and liabilities to the Manda Unit before formally applying for the transfer. They provided documents to the Department, including details of the transfer such as vehicle and LR numbers. The Department, however, maintained that the necessary requirements of Rule 10 were not satisfied, as the stock of inputs, capital goods, and work in progress were allegedly not available at Bagru Unit during the transfer application. The appellant argued that the Department failed to verify the submitted documents, which clearly indicated the transfer of goods. The Tribunal noted that the physical transfer preceded the application and found that the Department should have verified the documents to ascertain the stock position at Bagru Unit during the transfer. Consequently, the Tribunal set aside the impugned order and remanded the matter to the Original Authority for reconsideration after verifying the documents and allowing the appellant to explain them.

In conclusion, the judgment revolves around the dispute of transferring Cenvat Credits under Rule 10 of the Cenvat Credit Rules, 2004, from one manufacturing unit to another. The Tribunal emphasized the importance of verifying documents to establish the transfer of assets and goods, especially when the physical transfer occurred before the formal application. The ruling highlights the need for compliance with the rules and proper verification processes by the Department to ensure fair treatment in such cases.