2018 (10) TMI 315 - AT - Central Excise

Reversal of excess Credit availed u/r 14 of CCR - Penalty - Department entertained a view that the assessee has wrongly transferred the CENVAT credit to their new registration number - Held that - The appellant had duly intimated to the Range Superintendent vide letter dated 16.7.2012 regarding shifting of their premises to the new premises and requested for cancellation of registration number as they have applied for new registration for the new premises - the department did not raise any objection and did not have any doubt regarding the shifting of the inputs and the capital goods to the new premises and during the audit, which was conducted on 15/16.11.2014, no objection was raised and further, the original authority after considering the factum of shifting to the new premises as well as the audit report found the transfer of credit valid. The appellant has availed the CENVAT credit in the returns of the new premises and there is no question of any diversion done by the appellant - there is no infirmity in the transfer of CENVAT credit to the new premises and the original authority after proper verification has allowed the claim of the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Transfer of CENVAT credit to new premises without proper documentation and adherence to Rule 10 of CENVAT Credit Rules.

Analysis:
The appeal was against the Commissioner (A)'s order directing the appellant to reverse credit of ?8,78,793 under Rule 14 of CENVAT Credit Rules for allegedly availing excess credit in their CENVAT account. The issue arose when the appellant, a manufacturer of control panels, shifted premises and transferred CENVAT credit without sufficient documentary evidence. The Revenue contended that the transfer was improper as the appellant failed to follow Rule 10 of CENVAT Credit Rules. The original authority allowed the credit, citing the appellant's intimation of premises shift and acknowledgment by the Range Superintendent. However, the Commissioner (A) overturned this decision, emphasizing the lack of evidence regarding the actual transfer of inputs and capital goods. The appellant argued that they had intimated the premises shift, moved goods to the new premises, and verified credit during an audit without objections.

The Tribunal noted that the appellant had duly informed the Range Superintendent about the premises shift and had no objections during audits. The original authority validated the credit transfer based on the shift to new premises and audit reports. The Commissioner (A) set aside the decision due to insufficient proof of goods transfer. The appellant cited precedents to support their claim that prior permission for credit transfer was unnecessary. As the appellant availed credit in new premises' returns without diversion, the Tribunal found no fault in the transfer. Consequently, the impugned order was deemed unsustainable, and the appeal was allowed.

This case highlights the importance of proper documentation and adherence to rules when transferring CENVAT credit to new premises. While the original authority validated the transfer based on intimation and audit reports, the Commissioner (A) emphasized the lack of evidence of goods transfer. The Tribunal's decision focused on the appellant's compliance with Rule 10 of CENVAT Credit Rules and previous precedents supporting credit transfer without explicit permission. Ultimately, the Tribunal found no irregularities in the credit transfer and set aside the Commissioner (A)'s order, emphasizing the validity of the transfer based on intimation and audit verification.