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TMI Blog2019 (5) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business and sell it to another company as has been the assertion in the impugned order. In normal course of business, it is often the practice that one may decide to sell one of its businesses to another firm. In such cases, the business which has been sold gets de-merged from the parent company and merges with the buyer company. Rule 10(2) of CCR, 2004 squarely covers such cases also - there are no force in the argument in the show cause notice that the transfer of the benefits under Rule, 10 of the CCR, 2004 would apply only if the entire business is sold and does not apply if the seller company sells only one of this businesses (in this case, the BPO Division). Denial of credit on the ground that there is no sufficient balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erger with the appellant was by virtue of the orders of the Hon ble High Courts of Bombay and Delhi dated 18.01.2008 and 04.03.2008. Between the appointed date and effective date i.e., from 01.04.2007 to 04.04.2008 M/s Global was to carry on the business activities in the normal course of business for and on account of and in trust of the appellant company. All profits and income accruing or arising out of the de-merged division of the global or the expenditure or the loss arising or incurred by them was to be treated as profit and income or expenditure or loss of the appellant. Consequent upon the merger, the appellant availed CENVAT credit to the tune of ₹ 2,57,22,325/-. Of this amount of ₹ 1,85,71,025/- pertained to input ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After following due process, the Learned Commissioner disallowed the CENVAT credit and ordered its recovery along with interest and imposed an equal amount of penalty under Rule 15(4) of the CCR, 2004 read with Section 78 of the Finance Act, 1994. He further held that the penalty is liable to be reduced to 25% in case the amount as determined is paid along with interest within 30 days the date of communication of the order in terms of the proviso to Section 78. 6. Aggrieved, by this order the appellant filed this appeal. 7. Learned Counsel for the appellant would submit that: there is nothing on Rule 10 of CCR, 2004 which requires the entire business to be shifted by sale or amalgamation or transfer or lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the CENVAT credit taken has been correctly taken. 9. He would further submit that the assessee is entitled to take credit of the input service invoices of the BPO division of Global and draw the attention of the bench to paras 3.1, 3.2 3.3 of the merger agreement which read as follows: 3 Transfer and Vesting of the Demerged Undertaking 3.1 Upon the Scheme coming into effect, the Demerged Undertaking of the Demerged Company shall, with effect from the Appointed Date and subject to the provisions of this Scheme in relation to the mode of transfer and vesting, and without any further act or deed, be transferred to and vested in or deemed to have been transferred to or vested in the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the demerged company in relation to the BPO division as on the commencement of the appointed date and all other rights, benefits available under any rules, regulations, statutes including direct and indirect taxes laws and particularly Sales Tax benefits, CENVAT benefits, import and export benefits and customs duty benefits of the demerged company in relation to the BPO division shall get transfer to the appellant in this case. This scheme has been approved by the Hon ble High Court and therefore is binding on the Department. Any CENVAT credit benefits which were available to the BPO division of Global will by virtue of this clause become their benefits. In view of the above, he would submit that the show cause notice was issued withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sell it to another company as has been the assertion in the impugned order. In normal course of business, it is often the practice that one may decide to sell one of its businesses to another firm. In such cases, the business which has been sold gets de-merged from the parent company and merges with the buyer company. Rule 10(2) of CCR, 2004 squarely covers such cases also. In this case, we find that para 1.1.6.3 of the merger agreement specifically covers transfer of all assets and liabilities to the new entity including the CENVAT benefits. This agreement has been approved by the Hon ble High Court and therefore is final unless such agreement is reversed by a higher judicial forum. Under these circumstances, we find no force in the argum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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