2019 (10) TMI 579 - AT - Central Excise

Transfer of CENVAT Credit lying un-utilized in their Account of Manakapur unit - shifting of Unit from Manakapur falling under Belgaum Division to Hubballi Division - requirement of prior permission under Rule 10 of CCR, 2004 - HELD THAT - As per Rule 16 of the Chewing Tobacco Rules, it is provided that CENVAT credit can be availed and utilized by the manufacturer and there is no mention of a unit in the said Rules as against the specific mention of unit in CCR - Further, the scheme contemplated under Chewing Tobacco Rules is self-contained and there is no bar under the said Rules to transfer the credit from one unit of the manufacturer to the other unit. Further, though, the permission was granted by the ACCE after examination of the entire records and the documents under Rule 10 of CCR but in fact, the said permission under Rule 10 is not required and the appellant is entitled to transfer the said credit from one unit to another unit under intimation to the Department. In view of the COMMISSIONER OF CUSTOMS VERSUS M/S HEWLETT PACKARD INDIA SALES LTD 2011 (8) TMI 666 - KARNATAKA HIGH COURT , wherein it has been held by the Tribunal that prior permission under Rule 10 is not required for transferring the credit - Moreover, in the present case, the permission was validly given by the ACCE, Hubballi after examination of the entire records vide their letter dated 27.01.2016 and thereafter, the appellant has taken the credit to their Hubbali unit and utilized the same for payment of Central Excise duty for the same month. Therefore, by subsequent letter dated 03.02.2016, the Department cannot withdraw the permission granted earlier. If, at all, the Department wants to withdraw the permission, it cannot be done with retrospective effect in view of the decision relied upon by the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Transfer of CENVAT credit under Rule 10 of CCR, 2004 vs. Chewing Tobacco Rules, 2010.

Analysis:
The appeal involved a dispute regarding the transfer of CENVAT credit by the appellant, a manufacturer of Scented Tobacco/Zarda. The appellant sought to transfer unutilized credit from their Manakapur unit to their Hubballi unit. The Assistant Commissioner initially allowed the transfer but later withdrew the permission, citing a mistake in applying the relevant rules. The appellant contended that under Rule 16 of the Chewing Tobacco Rules, the credit transfer was permissible without the need for Rule 10 permission. The Counsel argued that the Chewing Tobacco Rules provided a self-contained scheme for credit transfer, independent of CCR, 2004. Reference was made to the definition of "Manufacturer" under the Central Excise Act, 1944, to support the contention that units belonging to the same manufacturer could transfer credits without restrictions.

The Counsel further relied on precedents to argue that revocation of permission cannot have a retrospective effect, and any actions taken based on the initial permission remain valid. The AR defended the withdrawal of permission, citing Rule 16 of Chewing Tobacco Rules, 2010. The Tribunal, after considering the submissions and perusing the rules, found certain undisputed facts. It noted that Rule 16 allowed manufacturers to avail and utilize CENVAT credit without specific mention of units, unlike CCR, 2004. The Tribunal held that the appellant was entitled to transfer credit between units without requiring Rule 10 permission, as confirmed by precedents like Hewlett Packard. It emphasized that the permission granted by the ACCE was valid, and the subsequent attempt to withdraw it could not have a retrospective effect, as per established legal principles.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal of the appellant. The judgment highlighted the self-contained nature of the Chewing Tobacco Rules regarding credit transfer and the invalidity of retroactive withdrawal of permission. The decision underscored the importance of following specific rules governing credit transfer and the legal principles related to the revocation of permissions.